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3 Responses  

1. taylor swift
   2.1.2010

   Best Answer – Chosen by Voters One of the most significant ways that the economy effects insurance companies is through the rate of return on their assets. Insurance companies own a lot of safe investments like Treasury notes. With low interest rates, Insurance companies earn less on that part of their overall investments. They also own a lot of mortgages and mortgage-back securities. These investments also pay a lot less these days and also have experienced a lot of defaults (slow or nonpayment) on these investments thus the returns on that part of the portfolio are also way down.
2. taylor swift
   2.1.2010

   In a slow economy the life insurance companies are affected by lower sales and lower returns on their investments. Secondly, they have already sold certain products for which they have the commitment and obligations to fulfill and hence will have lower surplus left after meeting these obligations. This would in turn affect the companies operating surplus, profits and in the long-run the Company will have to increase the rates. The reverse is the case in good economic times. Life insurance companies are no exceptions to the cycles which govern the economic factors. Source(s): Underwirter and Risk Manager
3. selena gomez
   2.1.2010

   The economy has already affected insurance companies by reducing their cash flow and losing money from fraudulent claims, etc. If you're concerned about the company that has your life insurance policy, you can check out http://www.ambest.com where they rate each insurance company and bank depending on their financial standing. We try not to write with insurance companies lower than an A rating.

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