For the insurance industry, a truly wonderful thing happened in the late 1970s. It was called ‘stagflation’.  The “stagflation” of the late 1970s/early 1980s was a period of a stagnant recessionary economy plagued with high unemployment and alarmingly high interest rates. It was an unplanned hardship for the country and its working people. But it was a boon for most insurance companies. When you pay your insurance premium, you are paying in advance. Insurance companies hold that pre-paid money awaiting the submission of claims, which will occur sometime during the coverage period. While holding the premiums awaiting receipt of claims, the premiums are put to work by insurance companies to produce investment income. During the stagflation period, interest rates were commonly running in the 12% to 18% range. Investment income was very, very good. So good that insurance executives started asking: how can we get more premiums to invest? And...(Read Full Article)