The debate about how high gas prices might affect auto insurers has been supplanted by concerns over how their balance sheets may look in light of investments that have turned sour in recent weeks. How individual companies will be affected by the economic slowdown will vary in the short term, but it seems likely that overall they will have some difficulties. The credit crisis comes at a particularly bad time for the auto insurance industry as their prices have fallen in recent years due to competition pressures. The government seizure of AIG also portends some upcoming shifts in market dynamics. AIG has indicated it is likely to sell off assets to repay federal loans, and with no announced buyer, the degree to which this will affect market concentration remains to be determined.

Tags: Insurance, Economy