The U.S. insurance industry employed 2.7 million people in 2018. In 2017, it was valued at $1.2 trillion. Of these total premiums paid, 52% was on life insurance and 48% was on property/casualty insurance.
Property/casualty includes auto, home, and commercial insurance, and totaled $558.2 billion in the same year.
While health insurance is measured separately, the total insurance industry contributed $602.7 billion—about 3.1%—to the nation's gross domestic product in 2017.
In 2008, the federal government was forced to spend $182 billion to bail out insurance company American International Group (AIG). The company was so large that its bankruptcy would have threatened the entire global economy.
Financial institutions around the world were major holders of AIG's debt and a large number of mutual funds owned AIG stock. The $3.6 trillion money market fund industry, at the time, invested in both AIG debt and securities.
In these times of economic instability the players belonging to both the national and international financial market attempt to protect themselves as effectively as they can against the risks.
Thus, an important help should arise from the insurance companies, which should offer viable products for covering the credit risk.
Credit insurance should protect financial institutions from the possible occurrence of bad loans. Increasingly more people are late in paying bank lending rates, so that, in June 2009, the total amount of rates paid with a delay of less than 30 days was of 817 million lei.
Meanwhile, according to the National Bank of Romania, the delays of more than 30 days had accumulated to 4.98 million lei.
Compared with the same month of the last year, 2008, the rates of late payments rose almost 4 times. Simultaneously with these payment delays, the share of overdued debts in the total balance of loans rose to 2.58% in June.
All these after in June 2009 the level was of 1.17% and at the end of the year it reached 1.47%.
In addition, the number of debtors is still growing. According to the data centralized by the Credit Bureau in late June, more than 600,000 individual clients had more than 30 days delays on payments.
At the same moment the total amount of the population’s debts of loans smaller than 20,000 lei was of 1.8 billion lei. A recent study carried out by Deutsche Bank warned that the rate of bad loans might get to 15-20% by midyear, in Romania and Bulgaria.
In addition to increasing bad debts, banks continue to face a decreased demand for loans. According to a study released by GfK Romania this year, Romanians fear that they would no longer be able to pay their debts.
It is a certainty that insurances represent a necessarily”evil”. Their main mission is to protect its customers from any risks that may arise from their activities. But as in any other field, there must be a clearly defined limit.
This limit is placed between the insured risk and insurance premium. There must be a close connection between them, so that insurance companies could still be interested in continuing their activity on the market, and the clients to continue to rely on these types of services.
SOURCES:
1. Research gate
2. https://www.thebalance.com/insurance-industry-trends-and-outlook-4774000
TAGS: INSURANCE, MESOTHELIOMA, FINANCE
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