While we have been mesmerized by the ill tidings of major financial institutions and related exchange traded funds (ETFs), many smaller publicly traded insurers have also been feeling the pressure too.

Investment losses are rampant, and long-term-care insurers are also feeling the burden of higher claims, reports M.P. McQueen for The Wall Street Journal. Regulators have stepped in to impose moratoriums on policyholders taking cash out of policies or trading them in for cash after more than half a million people in more than 30 states provided higher claims in such areas as life insurance and annuities.

Consumers are now looking deepening into the financial health of their insurers, especially with media coverage over financial-strength ratings, the main gauge used to determine an insurer’s ability to pay claims. The industry assures us that the ratings remain strong or very strong.

But, more than a dozen major insurers have seen ratings downgrades, with some dropping to levels reflecting weak financial  health. The continuing investment losses are also hurting the industry’s ability to pay claims and many clients may have to endure higher premiums with more stable and secure insurers.

Although AIG has gotten most of the press, major insurers like MetLife (MET) and Prudential (PRU) have all been hit hard with sinking shares and ratings downgrades, although their ratings still remain strong.

• KBW Insurance (KIE): down 28.3% year-to-date

In the banking industry, the focus of the nation’s attention rests on the 418 unnamed recipients of bunuses paid out by AIG (AIG) after the company received $170 billion in taxpayer’s money, remarks David Stout for The New York Times. The Democratic-led House OK’d a bill to deliver a 90% tax on bonuses given to employees at AIG and other firms bailed out by taxpayers with family incomes above $250,000.

Tags: Financial, Insurance, KIE, Sector ETFs