Insurance - Current Situation in America

As most countries effected to current world economic crisis, i think insurance company should play their social responsibility to public. This is what i found on Insurance in America currently.


The most recent Consumer Price Index makes a compelling case for the fact that state regulators may not be keeping up with car insurance rates, especially at a time when many Americans are least able to pay their bills.

Earlier this week the U.S. Department of Labor released figures showing that while the CPI, which measures the cost of much of what we buy and use, declined by 0.2 percent from a year ago this October, automobile insurance premiums rose 4.6 percent.

That’s good news for car insurers such as Allstate, Farmers, GEICO, Liberty Mutual, Nationwide, Progressive, State Farm and Travelers since they’ll probably show a profit on auto premiums for 2009.

But these statistics could raise a red flag for any state regulator who wants to ensure that insurers don’t make excess profits. California Insurance Commissioner Steve Poizner, who is running for governor of the state, already has a reputation for doing this with homeowners’ insurance.

Car insurance is mandatory in most states, and it has to be regulated. But states often give car insurers the privilege of “flex rating,” allowing them to raise rates by anything less than 5 percent in a given year without regulatory approval, thereby helping the bottom line. But at a time when inflation is virtually nil and other products and services cost less, at some point regulators are likely to ask, “Is this really fair?”

In most instances, the amount insurers pay policyholders when a car is involved in an accident is rising more slowly than the rates they charge, according to recent figures kept by the Insurance Information Institute. The cost of motor vehicle body work rose just 2.1 percent, total medical care 3.5 percent, physicians’ services 2.8 percent, and legal services 3.5 percent - well below the increases insurers are reaping.

Hospital services, at 6.9 percent, is the only cost above what insurers made, and even that increase is half a percentage point lower than in 2008. If the fear of the national health care plan is helping to bring that number down, then perhaps a little more regulation couldn’t hurt.