Like any other business, insurance companies, no matter how large or small they might be, have responsibilities to their both their shareholders and policyholders to ensure they manage their finances efficiently and in a profitable manner.
Whilst there are many legal obligations imposed on insurance companies to assure liquidity etc. so that they will always be financially able to meet their obligations and liabilities to policyholders, the current economic downturn could have wider implications for policyholders.
As consumers refuse to be tempted into buying new cars, or choosing to hang to their existing car for longer than usual, insurers are going to need to look at increasing current insurance premiums in order to maintain investment returns.
There will of course, be some mitigation in the increase in premiums for consumers as their existing cars will be older and worth less, therefore, attracting slightly lower premiums to offset part of the probable increase.
There is also suggestion following a recent study by Norwich Union that insurance claims may rise in the next few months putting even further pressure on insurers increasing further the likelihood that insurers may need to increase premiums and individuals and businesses alike, should perhaps make provision in the strategic plans to allow for same.
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