Insurance companies themselves are also partly to blame for the steady decline in policies. In a bid to streamline their businesses, insurers diminished the number of in-house agents to save on recruitment, training and other costs. Meanwhile, the companies farmed out sales to securities brokers and independent financial advisors.
Moreover, the insurance industry has been suffering under a low rate environment. Low rates depress returns on fixed-income assets that insurers use in their investment portfolios, a traditionally important source of profits, along with underwriting. Monetary policies have also increased competition in the industry. Specifically, reinsurers, which help insure insurers, are seeing premiums drop as income-hungry investors push down yields on debt securities like catastrophe bonds. [Insurance ETFs Languish in Low-Rate Environment]
SPDR KBW Insurance ETF
For more information on the insurance sector, visit our insurance category.
Max Chen contributed to this article.