Tight Rope Walking by the Insurance Industry

Even in the recession insurance companies have made money. Mostly from interest income out of investments and lack of significant claim catastrophes over the last few years. However to continue their earnings insurance companies may be faced with tough times. The Fed is looking to keep interest rates depressed even through the slow recovery. As the economy picks up and people and small business grows, claims will increase. The insurance companies will then have to walk a tight rope on when to start raising rates to keep their earnings. If they raise rates to fast the industry could hinder the already slow economic recovery. If they don't raise premiums then their earnings could be negatively impacted. So it is a fine line they will have to navigate over the next few years. Lets hope for small businesses around the country that the industry will slowly raise rates to cover the forthcoming claim increases so that the economy can grow. However if the insurance companies get greedy and try to jack up rates expotentially, small business will bear the burden. Until next time be careful out there and know your risks. K

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