As if the insurance industry didn't have enough of an image problem, the bad press generated by the boneheaded acceptance of subprime mortgage exposures by bond insurers has prompted devastating headlines and a new round of questions about whether carriers are adequately regulated–including the inevitable call for Uncle Sam to come to the rescue.
Even though financial guaranty insurance accounts for a tiny portion of overall industry premium, failures of judgment in that sector put all insurers in a terrible light and sent regulators scrambling to battle stations.
Keep in mind the public does not appreciate the distinction between one type of insurer over another. To the average person, insurance is insurance. Thus, the story is that once more, the industry let everyone down.
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