Bowman: Obama Stimulus Plan to Help Economy

President Barack Obama’s economic stimulus package will benefit the insurance industry, which is recovering from 2008 catastrophe and investment losses, Harry Ennevor, president of E.G. Bowman Company, told the Jamaica Stock Exchange Investments and Capital Markets Conference last week in Montego Bay.

“Companies working on highway, infrastructure, housing, school, and technology projects will all require insurance for their operations, plus workers’ compensation, travel-accident and health insurance for their employees,” said Ennevor, whose New York-based firm is the largest minority-owned insurance brokerage in the United States. “President Obama hopes that the plan will preserve or create 3 to 4 million jobs—and many of them will be in the insurance industry, both at carriers and brokers. The stimulus package is a positive for not only the industry, but also for the U.S. and world economy."

Worldwide, the insurance industry, including life insurers, is expected to absorb about one-fifth of global losses from the financial crisis, according to the International Monetary Fund. And while the U.S. industry faces challenges, insurers, particularly property/casualty companies, are in much better shape than banking and other financial institutions, Ennevor pointed out.

“In the U.S., the states are responsible for regulating insurance companies," Ennevor said. "State regulators don’t let operating insurance companies invest heavily in credit-default swaps or subprime mortgages. They are required to put the vast bulk of their assets in plain-vanilla stocks and bonds.” But those investments declined last year, and insurers are raising premiums to catch up. Additionally, insurance companies’ catastrophe losses in 2008 rose to about $45 billion, about double 2007 levels, according to Munich Re’s estimate, making it the third-worst year on record.

“But most insurers are still making profits—something we can’t say about banks and other financial companies,” Ennevor added. “The vast majority of insurers are still in good financial shape, and though less wealthy than before, are well positioned to take advantage of future opportunities. The president’s stimulus package will provide many opportunities for carriers, brokers and agents.”

Also speaking were Orville Johnson, executive director of the Insurance Association of Jamaica, and Patrick Lawe, managing director of Lawe Insurance Brokers Limited.

E.G. Bowman (www.egbowman.com) is a full-service insurance brokerage and loss-control firm in New York City whose clients include FORTUNE 500 companies, major nonprofits, government agencies, individuals and small businesses. It has been in business for 56 years and is licensed in all states.