Post Date February 10, 2012 – An auto insurance industry think tank has published a study highlighting the prime concerns among insurance companies in 2012. According to The Geneva Association, global financial instability is the #1 source of distress in the auto insurance industry today. Lack of government preparedness and efforts in dealing with natural disasters come second, while our aging U.S. population comes last.
A good example of how these issues might pan out entails financial regulations. Regulatory mechanisms have a direct effect on the operation of capital markets. This includes the rate of growth and scope of the auto insurance market. Sound technical knowledge of prevailing issues is necessary to effect changes and reforms in these choppy financial markets, which include banking and car insurance. The car insurance industry is particularly unique, although it shares some traits with other players in the financial sector. Insurance industry regulation will for the first time feature at the G-20 talks. Accordingly, crucial policy decisions are likely to emerge from this meeting of global financial icons. It is imperative that such decisions adhere strictly to the principles of sustainable risk management relevant to modern insurance practice.
This is especially true in light of the tragedies that seem to wreak havoc continually in the 21st century. In 2011, natural calamities alone accounted for close to $380 billion in claims from affected insured persons, which led to car insurance companies suffering major losses. In their report, the Geneva Association recommended that governments initiate climactic studies and long-term sustainable policies to deal with natural catastrophes. Such measures would compliment the risk management aspect of the car insurance industry. The think tank also expressed concern over the ability of insurers to sustain social security for the rapidly aging demographics in many developed countries. They noted the wavering confidence in some of the investment products currently mushrooming in the market. The report urged financial authorities to tighten controls over social security and retirement benefits to offset crises in the future.
Michael E. Dortch
President & Managing Agent
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania 19446
(800) 807-0762 ext. 602