Insurance company failures have doubled in the past two years, raising the fear that the United States may be headed for another financial crisis on the scale of the S & L debacle. Industry spokesmen deny that insurers' financial woes are of that magnitude, but many support measures that would improve the existing state regulatory system. They generally don't want the federal government to step in, but there is a move afoot in Congress to do precisely that.
American consumers may well wonder if there is any safe haven for their hard-earned dollars anymore. First, it was the savings and loan crisis, which could end up costing taxpayers more than $100 billion. Then came the news that some of the country's biggest commercial banks also were in trouble, further adding to savers' jitters. Now the spotlight is on the insurance industry. Long considered the essence of stability and conservative behavior, even to the point of stodginess, the insurance industry has been rocked by a succession of bankruptcies.
Insurance industry insolvencies doubled from 1986 to 1989, when 43 companies went under. At least 26 companies have failed this year, and several of the industry's biggest firms are showing signs of strain. The Travelers Corp. posted a half billion-dollar loss in profits in the third quarter. The insurance industry as a whole reported a 50 percent drop in third-quarter profits compared with the same period last year. This was well below the 7 percent average gain in profits reported by all industries.