Business: Insurance Policy Sales Drop By 3.7%

By Jeffrey Paulsen on April 18, 2010, 8:14 am Posted in Business News

The PCIAA stopped the headlines today with a shocking announcement: insurance sales have made the largest drop in five decades.

PCIAA

The PCIAA, or Property Casualty Insurers Association of America, have recorded a three-year straight decline in the purchase of insurance policies by individuals and business-owners alike. The association began tracking data in the late 50’s up to the current date, and was shocked when they realized that 2009 saw such a great drop in policy subscriptions.

This doesn’t come as much of a shock, however. Most companies want to cut back costs in any way they can, and if that means downgrading a few insurance policies to the next lowest level of coverage, they will do anything they can to put extra money in their pockets. “It’s a hard time to be an insurer,” says James Schumacher of the Renton State Farm insurance company, “Especially when you’re trying to insure corporations and small businesses.”

Experts say that another thing driving down the amount of insurance policies purchased by corporations is job cuts. When you don’t have as many employees, you don’t need to pay for as much insurance.

Long-Term Effects

As interest rates are driven up over the next eight to ten years, insurers expect to lose an additional 20-30% of their current clients, both corporate and individual. “In order to make the same revenue, we’ll have to drive up costs for even the most basic insurance policies,” Schumacher says, “And no one wants that, no one wants to pay more.”

 

A steady decline in insurance policy purchases has forever made a dent in the market. As demand decreases, the prices will be driven higher so insurers can make the same revenue. But how much do they expect to lose, and how much can you expect to pay?

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