Wizard wrote:scrumpyjack wrote:The difference between the banks and the insurers is that the banks are being asked to increase loans to businesses on a very large scale. The insurers merely have to ensure they can meet valid insurance claims on existing policies.
I wonder whether the ask of insurers is to meet a large number of claims that are not actually valid for political expedience.
You mean for the insurance companies to give away some cash because the government asks them to? And what type of "not actually valid" claims are you thinking? To pay death claims for someone who hasn't died perhaps. or to continue paying an annuity after someone has died?
To bundle the life insurance companies into the same basket as banks has no logic as their operational cashflow is largely pre-determined - they pay death claims and annuities on the basis of their legal liabilities. To require them to conserve cash by deferring a dividend would also suggest they are going to need to use this cash for some purpose outside normal operations. What could that be? Is the suggestion the government is going to force insurers to become lenders to businesses and individuals overnight, or perhaps "persuade" them to provide cheap finance to banks so the banks can lend more?
The move on the banks is clearly political and smacks of payback for the government help they received a decade ago. The argument that banks need their dividend cash to fund loans to troubled businesses is superficial unless the government is also going to take over the decision making on loan criteria as without that the banks will simply carry on a business as usual approach. To apply the same restraint on insurance company dividends would be illogical - and on which sector would the next move be?
