The National Association of Mutual Insurance Companies (NAMIC) issued the following statement in response to allegations by the Consumer Federation of America (CFA) regarding record profit levels among insurers.
“The recent positive financial news for 2006 is good for consumers as well as insurers, and is a direct result of the lack of severe storms last year,” said Carl Parks, NAMIC senior vice president of government relations. “It means insurers are starting to recover from the devastating effects of the 2004 and 2005 hurricane years.”
While the industry as a whole is reporting economic gains, some insurers continue to rebound from tougher financial years. Nevertheless, many consumers are reaping the benefits of the recent good news, the NAMIC release said.
“The fact is, insurance rates for drivers and homeowners in most areas of the country are being reduced,” Parks said. “The exceptions are the hurricane-prone areas of the Gulf coast and the eastern coast of Florida, which remain vulnerable to severe weather.”
“The last thing policyholders want is for their insurance companies to be unable to pay claims following a major catastrophe,” Parks said. In 2006, insurers were able to increase policyholder surplus by 13 percent, thereby improving their ability to sustain losses and pay claims in 2007 and beyond.
Parks said NAMIC’s members are committed to holding down insurance rates wherever possible, especially since the vast majority are mutual companies. “Wall Street does not drive our business,” Parks said. “Our members continually strive to do what’s right for the policyholders, since they — rather than stockholders — own the insurance companies.”
Parks said he hopes the upcoming special session of the Florida Legislature starting Jan. 16 will result in much needed improvements to that state’s insurance climate. “Lawmakers need to work with insurers, homeowners and others to seize the opportunity to forge a long-term solution.”
The National Association of Mutual Insurance Companies (NAMIC) is a full-service national trade association serving the property/casualty insurance industry with more than 1,400 member companies that underwrite more than 40 percent of the property/casualty insurance premium in the United States.
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