Catastrophe losses, fraud & affiliate programs were the top causes of impairment of insurers says AM BestNEW ORLEANS - It is the time of year that people living along the Gulf Coast worry about hurricanes. Insolvencies by some insurers in recent years are prompting questions about whether the insurance industry is financially prepared for this year’s hurricane season.
“I think we cannot make a blanket statement about specific companies, said Manyem. “But in general, we look at the homeowners’ insurance market, and we think it is very it is overall as an industry, it’s well capitalized. Having said that, we do have a negative outlook on the homeowners’ property insurance market. Climate risk is an important factor in that negative market segment outlook that we assigned to the homeowners’ property market.
“More importantly it poses a risk for the policyholders of the insurance company and the government as well, because it has to spend money in order to bail out the policyholders because the insurance company cannot fulfill the promise,” Manyem said. “These are people who write business on behalf of the insurance companies, they might or might not have any skin in the game at all, like they might write a really risky homeowners’ insurance policy and they might pass it on to the insurance company and the insurance company is on the hook if something happens to them and in return, the insurance companies pays them a commission,” said Manyem.“There’s a lot of guardrails, if you will, when an insurance company operates.
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