Life Insurance Industry Emerging from Recession

01/12/2010

American life insurance companies have largely been able to navigate themselves out of the recession and to position themselves for better economic times. However, the economy has yet to fully recover, and financial experts are warning that the industry will have to remain cautious in the short term.

According to recent analysis from Ernst & Young, life insurance companies can generally expect a period of weak earnings, slow growth and more regulatory oversight in the foreseeable future. As a result, the report notes, many insurers are on a "back to basics" strategy that can cut both ways when it comes to preparing for the future.

"That thinking may be helping insurers survive, but to become profitable again and achieve growth, insurance executives are going to have to become more innovative and proactive to change the way they conduct business," said Doug French of Ernst& Young.

With these things in mind, life insurance companies may better position themselves in the current economy by ensuring that their capital is optimized in response to ongoing financial pressures. Companies should also focus on their core businesses and make their risk management capacity more robust.

When it comes to life insurance, coverage is especially advisable for people with small children and dependent adults because a policy provides additional ways to provide for their future financial needs.

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