Subprime Impact

Insurance executives expect subprime and other credit issues to continue to have a significantly negative impact on the industry’s financial performance in 2009. According to a survey conducted by KPMG, 82 percent of 375 executives attending its 20th annual Insurance Industry Conference expect the credit crisis to have a significantly or extremely negative impact on 2009 performance. This compares with just 14 percent who said the problem would be finished by the end of the year. In 2007, only 55 percent felt that subprime issues would have a negative impact on financial results and performance. Insurance execs responding to the survey also indicated that the industry as a whole did not do a good job understanding its exposure to the credit and subprime issues in 2008. In fact, 40 percent gave the industry a grade of ‘D’ or ‘F’, while only 19 percent assigned a grade of ‘B’ or better and 41 percent assigned a grade of ‘C’. What do you make of this assessment?  

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