The Balance: The Stock Market Trend and How it Affects Insurance Claim Payments

2020-07-08T01:11:02-04:00 April 8th, 2020|

Due to the impact of the Coronavirus, the stock market has taken a drastic and fairly sudden downturn in the average rate of return, and it’s forecasted to get worse before it gets better. With an unknown end date to the pandemic, investors, property owners, and businesses can expect to see the market continue to decline, and a worldwide economic recession to be in full force by the end of 2020.

According to the market has an average annual return rate of -16.63%, compared to a 11.08-15.4% average return in the previous decade within the same indexes. And while the current rate of return for these markets has stabilized somewhat – according to, the current average rate for the three indexes is 1.05%, it will take the market some time to recover.

Worrisome, the stock market return is forecasted to drop further by the end of Q2 and beginning of Q3. Analyst Charles Dumas has indicated that the idea of the economy simply “snapping back” when the pandemic has settled, is unlikely and should be considered the opposite of common sense due to the more than 700,000 jobs lost in the United States alone.

How does this translate to insurance and property claims? A common belief is that insurance carriers make their profits by charging and accepting premiums. These premiums are then taken into a pool from which both claims are paid and profits are drawn. And while this isn’t entirely inaccurate, insurance carriers are only marginally profitable if they rely on premiums alone. Insurance carriers, like any business and investor, have shareholders and rely upon the stock market. The real way the insurance carrier profits is by investing the premiums into the stock market and seeing a return on those investments, prior to having to pay claims from the premium pool.

Ultimately, with the stock market in a current downtrend, insurance carriers must find another way to keep profits up. This means the industry is likely to see an increase in denied claims and underpaid claims.

What can a policyholder do? Premier Claims offers not only complimentary policy reviews, but risk-free denied and underpaid claim reviews. Premier Claims offers and provides a service including a full legal and insurance claim expert review prior to a policyholder ever signing a contract with us. Once a client has agreed to contract with us, our wide range of service includes legal oversight, extensive estimating using professional software, and an experienced team ensuring claims are negotiated until they are paid to their fullest extent.


Concerned your claim was underpaid, or receive a denial? Need to make sure your policy covers what’s needed? Contact us at or 877.219.0049, or use our Denied Claims page to upload your documents and request your review.




Written by: Kyle Maring, Senior Public Adjuster, Premier Claims

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