Bob Hunter, the director of insurance at the Consumer Federation of America, said that while this year has been a bad one for insurance companies, the years before it have been good, allowing companies to shore up their balance sheets.
Hunter said life insurance companies, in particular, have been hard hit this year because they were more likely to make investments in mortgage-backed securities. Still, he said, while at least one small life insurance company could buckle under its investment losses, the majority of companies are not in as much danger.
"Most of the regulated industry will stay solvent," he said.
Gallanis, meanwhile, cautioned against comparing insurance companies in the news today to AIG, which is receiving a total of $150 billion in investments and loans from the federal government.
AIG's "business model is not followed by any other company in the industry," Gallanis said.
"I think the industry's actually in pretty good shape," he said.
If one or more insurance companies go under, insurance guaranty fund organizations say they're prepared to step in to ensure that most consumers continue receiving the benefits guaranteed by their policies.
"In any situation where you've got a number of insolvencies or a huge major insolvency, funds have proven themselves to be flexible," said Barbara Cox, the vice president of legal and regulatory affairs at the National Conference of Insurance Guaranty Funds.
Every state has at least two guaranty funds that cover claims associated with insurance companies that have shut down. One fund covers property and casualty claims, including workers' compensation, and another handles life insurance, health insurance and annuities. The funds are supported by assessments charged to insurance companies.
In the last six years, guaranty funds in the United States have paid a total of about $10 billion in claims, according to the guaranty funds group.
In the past, there's been criticism of guaranty funds for taking too long -- in at least one case, years -- to address claims, but Gallanis said the process is much faster today.
"We continue [customers'] coverage from the time the company fails," he said. "You never miss a beat."
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