Get out the cynanide capsules.
According to Forbes economic guru A. Gary Shilling (http://www.forbes.com/shilling), the current economy — which many experts are calling the worst since the Great Depression — is a long way from hitting bottom.
Shilling describes a four-phase process of deterioration in which the current housing and financial services failures are eventually followed by a depression of gross national product and finally, a global recession.
According to Little Mister Sunshine, American consumers are already curtailing their discretionary spending, even at the high-income levels. The rest of us, he says, are shopping at discount chains instead of department stores, and otherwise cutting corners (News flash: I stopped buying toilet paper at Nordstrom's years ago.)
Shilling advises investors to purge their portfolios of stocks from companies that provide such discretionary products and services as "cars, appliances, air travel, cruises and vacation houses." But if his bleak prediction is true – and current events suggest that it could very well be — how soon will it be before insurance becomes a discretionary expense for financially strapped consumers?
Recent surveys already indicate that many Americans are cutting back on medical visits to cut corners, and that businesses are bypassing some liability coverages because they think the cost exceeds the risk. If strapped consumers eventually just stop making payments on their credit cards, car and student loans as Shilling predicts, it's not much of a stretch to see them giving up all but the legal minimum on insurance — if that.
All this speculation begs the question of what impact this will have on agents and brokers. Are your policyholders telling you they can't afford coverage? Are you seeing more resistance to cross-selling and personal lines sales? And what are you doing about it?
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