Bad economic times effects everyone, including insurence companies and policyholders. The impact felt by insurence companies trickles down to the policyholders by higher insurence premiums. It is a cause and effect relationship.
Bad economic times, recessions and increased unemployment causes an increase in insurence claims. The effect of increased insurence claims causes increased insurence premiums. Insurance premiums remain low when insurance claim activity remains low.
Insurance premiums can also be kept low when insurance company’s are able to earn a good return on their investments. And given the condition of the stock market right now, the returns are just not there.
Due to an increase in bankruptcy’s and foreclosures, insurence company’s are seeing an increase in claim activity the effect is increasing insurance premiums.
Thefts, vandalism and arson are two areas of concern in the insurance industry. The theft of steel copper is increasing. There are a lot more vacant properties, which leads to increased vandalism. This increase in claim activity eventually effects insurance premiums.