What New Presidency May Mean for Insurance

Fitch Ratings, one of the three largest credit rating agencies in the United States, has speculated about the new presidential administration and what that means for the insurance industry.

While Fitch did not expect any policy initiatives to be directly focused on the non-health insurance industry, extensive changes to the financial industry would ease regulations for the larger U.S. insurance corporations.

Though Fitch did stipulate that a new presidency would not have an immediate impact on the insurance industry, as well as the fact that insurance agencies are generally regulated by in-state laws, the macroeconomic trends that could emerge from a change in economic policies could have a critical impact on profits, premium growth, and investment performance.

With financial deregulation a major standing point during his election campaign, and an economic strategy likely to be backed by the majority Republican Congress, changes to the current system will undoubtedly have multiple implications for insurers. The repeal of the Dodd-Frank Act, which was a massive financial reform legislation passed in 2010 as a response to the financial crisis and to develop oversight of the American banking system, could greatly reduce regulatory standards.

Three of the largest insurers – Prudent, AIG, and MetLife – were all designated as systemically important bank and non-bank financial institutions (SIFIs) in 2014 and faced higher standards.

Fitch analysts expect a Trump administration to begin reining-in these designations following changes in the Financial Stability Oversight Council (FSOC) leadership or through changes to the Dodd-Frank Act itself.

The Federal Insurance Office, which was developed under Dodd-Frank, may see its role diminished or modified under the new president, and this could also reduce the nation’s participation in international insurance regulatory activities.

Consumer protection would likely be affected by deregulation and tax code changes. Some life insurance products benefit from tax sheltering and offshore business; if corporate tax rates are lowered or tax rules simplified, the relative value of these products will likely change as well.

Alongside potential regulatory and tax shifts, insurers will also have to consider recently-approved Department of Labor rules that affect investment portfolios, and macroeconomic changes.     

Fitch noted that future trends involving increases in interest rates and limited inflation could be positive for insurers, but sharp spikes in either of these could also be disruptive to profitability and growth across all insurance sectors.

While it will likely be some months before the new administration is able to implement changes and those changes begin to take effect, it’s still important for the general public to be aware that industry deregulations may leave a significant mark on their insurance policies and the manner in which their insurers work with them.

The attorneys at Millin & Millin are here for you when you need us most.

While new governmental administrations and presidents can always be a cause of concern, it’s important for consumers to know that still does not give insurers the right to act in bad faith.

Unfortunately, large insurance companies are business, and thus are ultimately concerned with increasing profits and lowering overhead. This also means that the general public can fall victim to their bad faith tactics and business techniques.

Don’t allow your insurance company to take advantage of you. The attorneys of Millin & Millin are here to help protect your rights and fight for your due justice. Contact us today at (956) 631-5600 for a free case evaluations.