Insurance Today

A number of problems involving insurance exist today. For example, new types of policies are needed to cover such risks as accidents in nuclear power plants, environmentally damaging oil spills, the disposal of hazardous wastes, the use of dangerous products, and dependence on computers.

In social insurance, the United States and other countries face severe difficulties in providing future benefits mainly because of large increases in the proportion of elderly people. Rapid rises in the cost of medical care have also been a serious problem in the United States. In the 1990's, increased use of managed care plans dramatically slowed the rising cost of medical care. Nevertheless, the aging of the U.S population probably will put severe cost pressures on both private insurers and government programs, such as Medicare and Medicaid.

Natural disasters such as hurricanes, earthquakes, and tornadoes have caused big losses for both property owners and property insurers. Increased construction in areas where such risks as earthquakes and hurricanes are high has resulted in more extensive losses from natural disasters. State government insurance programs have been established in Florida and Hawaii to respond to hurricanes and in California to respond to earthquakes.

Some of the most significant recent developments in the insurance industry have included movements to combine companies into larger ones, to allow insurance companies to engage in a wider variety of activities, and to enable them to provide their services around the world. As a result of these changes, the trend has been toward fewer but larger insurance organizations. Mergers have taken place not only between two or more insurance companies but also between insurance companies, stock brokerage firms, investment banks, and commercial banks.