As long as the economy can keep it’s momentum into the 2010, the insurance industry’s fortunes should also improve.  They are at markedly improved situation from the start of 2009 which was at the height of the financial crisis.   While the stock market has a ways to go before it fully recovers, the partial rebound in the latter half of 2009 took a heavy burden off the industry’s capital levels.

There is a lot of uncertainty for the industry going into 2010 , especially where financial regulation is concerned.  The health insurance sector also has major concerns over the ongoing health care debate in Congress.Demand for insurance took a big hit in 2009 and with the labor market yet to recovery, the number of policies the industry writes could be well below normal levels for most of 2010.  While it looks to be slow going in the first half of the new year, many analysts are hoping for demand to pick up in the latter half as the economy continues to improve.

A more lingering problem may be the general decline in premium prices as lower demand has spurred competition between insurers trying to maintain market share.  State regulators will also be reluctant to approve request for rate hikes as their many of their residents continue to struggle.

While underwriting profits have never really made up the bulk of the industry’s profits, what may be even more important is whether or not the stock market continues it’s recovery.  Investment profits are their bread and butter and with the lessons from the recession still fresh in their minds, the industry is also likely to seek safer investments and thus returns than the past few years.

While they may not be as profitable as the years leading up to the recession as long as they returned to their tried and true methods, the insurance industry should recover somewhat in 2010.

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