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In 2011 alone, three years after the initial shock of the crisis, over 1 million homes have been foreclosed on, and projections say that this number will only increase in the foreseeable future.
Naturally the crisis has had serious effects on the general population as millions of people have had their homes taken away, prompting such programs as the Home Affordable Refinance Program (HARP).? The crisis has taken a significant toll on parts of the private sector that work in tandem with mortgages, most notably the real estate market, but also industries that are mutually exclusive such as the construction industry and especially the insurance industry.
The insurance industry is far from first on the list of mortgage crisis victims, but it is a trillion dollar industry, and should certainly not be discounted.
Homeowner?s insurance and homeowner?s insurance leads that help fuel the insurance industry, specifically, bared the brunt of the mortgage crisis for the insurance industry.
With fewer houses owned and increasing numbers being foreclosed upon, fewer houses are getting insured.? This directly results in fewer agents making a sustainable profit at their current jobs.
According to the 2010 US Census, there are approximately 130 million housing units in the US, and little more than 66% are owned (including those whose mortgages have not yet been paid off).? This means that there are about 87 million owner (or almost owned) homes in the United States.
With the number of homeowners decreasing at a staggering level, the number of homeowners? insurance policies is decreasing at an even faster rate.? With families struggling to make ends meet, concepts like insurance become an afterthought.
According to foreclosure attorneys, 1 in 5 homeowners are late on their mortgage payments.? When 17 and a half of 87 million homeowners in the US do not know where or when the will receive the money to make their next mortgage payment, the thought of investing a lot of money into insuring a home that you have the strong chance of losing their home seems like a waste of money.
And even those homeowners who feel confident that their finances will permit them to keep their home still do not place enough importance to homeowner?s insurance.? According to the Home Insurance Guide, more than two thirds of homes are underinsured.? Home insurance has become more of a luxury than a necessity.? Homeowners would rather take the gamble that nothing will happen to their home than insure it in case something does.
In many states, homeowner?s insurance is mandatory, but homeowners are forgoing private insurance companies and are instead turning to state run alternatives that offer only the bare minimum.? The popularity of this alternative is expanding the toll that the mortgage crisis has taken on the insurance industry.
The concept of buying insurance is like buying ?peace of mind? has become an antiquated extravagance.? When the possibility of having a house foreclosed on exists, no insurance will bring peace of mind.
The mortgage crisis has changed the mentality of America?s average homeowner.? Home ownership has become an ephemeral and fleeting institution and owners are in constant fear of losing their biggest commodity and therefore do not want to protect it.? This new mentality, in conjunction with the original mortgage crisis is effectively downsizing the entire home insurance industry.
This post was written by Tatyana Levin?who works as a copywriter for InsuranceFiles.com.
Short URL: http://www.thenichereport.com/?p=7482
Source: http://www.thenichereport.com/uncategorized/the-insurance-industry-after-the-mortgage-crisis/
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