Injured workers and the “comp community” should be rejoicing that-so far, at least-the economic crisis of 2008 hasn’t been reflected in the California workers’ comp world.
Whether that will remain the case isn’t yet clear.
The Hartford Insurance is having some trouble. More about that in a minute.
The U.S. economy is beginning to reach slurpee status.
Case in point: today, word came that the U.S. central bank, the Federal Reserve, is considering a plan to buy vast amounts of American companies’ unsecured debts. The goal would be to unclog the credit backup which threatens to make a shambles of our economy. At risk are the jobs of millions of Americans who work for small and large businesses who can not get credit to puchase inventory or fund their activities.
But consider how utterly radical this plan would be. Government essentially would be lending to American business. Uncle Sam buying commercial paper. Wow. Read about the proposal here in the New York Times:
http://www.nytimes.com/2008/10/07/busin … nted=print
Back to the story regarding The Hartford, which I’ve been following.
The Hartford is a huge multiline insurance company which also happens to have a major presence in the California workers’ comp market.
The Hartford receive a $2.5 billion capital investment (or shall we call it a transfusion?) transfusion from Allianz.
Hatford investors lost as much as $9 billion in stock value last week on concerns about the insurer. Fitch and Moody’s services have lowered ratings on The Hartford over concerns about its exposure to credit market problems. Specifically, The Hartford had exposure to Lehman Brothers, Washington Mutual and AIG. Losses at The Hartford for the 3rd quarter of 2008 may be as high as $2.2 billion.
It’s not likely that these losses will affect California workers’ comp operations based on what we know now. If you are an injured worker, covered by Hartford, don’t be freaking out just yet.
But The Hartford is just one of many insurers which could find themselves significantly weakened by the crisis as it unfolds. State regulars will undoubtedly want to watch closely.
Stay tuned.
Julius Young
www.boxerlaw.com
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Category: Political developments
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