July 30, 2010

How The Recession Has Affected Auto Insurers

In the second half of 2007, the world was hit by an economic recession. All businesses were threatened by this. The auto insurance industry was one industry that was hit hard. The current state of the economy has many people in search of an affordable auto insurance quote. The economic recession has affected auto insurers so much that they have no choice but to raise their premiums.

One reason why premiums are rising is because many people are reducing their coverage. Ironically, they are doing this to lower their premiums. A recent study indicated that in 2010, 17% of American drivers will be driving uninsured. Much of this is at the expense of insurance companies that could have covered them. In response to this loss, insurance companies are compensating by raising the premiums of all their policyholders.

Auto insurance companies have to raise premiums for other reasons as well. They are not only losing money to people that are switching or dropping policies. They are losing money from people who are staging accidents so that they can claim money in these hard economic times. This is at the expense of auto insurance companies.

Another issue has affected the auto insurance industry as well. Since we are in a recession, people are generally less willing to spend money. As a result, people are less willing to buy cars. Naturally, there is less demand to purchase auto insurance policies. Once again, auto insurance companies must compensate by charging higher premiums.

Americans are now trying hard to bargain for better deals with their auto insurance companies. In some cases, they’re doing this just to save a few dollars a month. Many people have chosen to go online to find a decent auto insurance quote.

There is a large effort to keep many Americans from switching their auto insurance policy. Insurance companies desperately need their business. However, the practices of certain insurance companies may only make the situation worse. Some insurance companies are firing agents lacking in sales performance. This increases the unemployment rate, making the economic recessions worse. It’s a vicious cycle.

Always remember: insurance is important. This is true whether we’re in an economic recession or not. The money you spend on insurances guarantees the safety of you and your family. Money spent on your loved ones is money well spent. In addition, spending money on insurance helps stimulate the economy in these hard times. Don’t let the economic recession keep you from having auto insurance. If you don’t have insurance, like many Americans, it’s not too late to find a good auto insurance quote today.