Recession Increases Driving Risks Special

Here's a new worry, as if swine flu and terrorism isn't enough. While the news focuses on death from mass killings and disease, accidents remain a much greater cause of death. How might that be further impacted by this recession?

Just days ago a major accident along a highway outside Natchitoches, Louisiana killed three children and two adults. The accident was particularly tragic since the driver was the only surviving child of an elderly woman who not only lost grandchildren and her daughter, the driver, but had both legs broken in the accident. Marcella Walters remains hospitalized as another victim of an auto tragedy. But the issues for many people go beyond the physical tragedy to financial problems that happen after auto accidents, as a Farmers Insurance representative explains. Peter Maucy is a young insurance representative, originally from Czechoslovakia. He approaches insurance with great caution, he says, because he believes it is very important that people understand risk and what that might mean, particularly when times are tough. His supervisor, Tony Boscacci, agrees. During an interview with them today, they talked about how the recession has put more people at financial risk. According to both Maucy and Boscacci recent reports from the automobile insurance industry declare that 20% of people are uninsured. What they say is likely worse is that an additional 30% are under-insured. When asked to elaborate on the problem, this is what Boccaci said. "Most people only get bare bones coverage these days. That's not enough. It often doesn't cover real losses in an accident, so people can lose their homes and life savings. That means the recession has put more people at risk." I asked Boscacci and Maucy whether or not the downturn in auto insurance purchase meant their company might be struggling financially. Boscacci said, "Actually Farmers is doing okay because it is diversified. Another strength is that the company did not invest in subprime morgages as other financial service companies did. The company put its money in investments like T-Bills, so when the recession came, the company didn't have he financial stresses other companies had. All of that has allowed it to be one of the largest employers in Hillsboro, Oregon, offering jobs to a number of people in this general area." So while people on the highway are at risk of accidents, the financial risks this year have increased sufficiently to make driving another one of those special worries heightened by the recession. And for those who look for a solvency and to minimize personal risk, it's good to know how an insurance company takes care of its own funds in relationship to consumers and investors.