While nearly two-thirds of consumers believe the economic conditions in the United States are “very unfavorable,” a wide majority of them have not taken any action to realign their financial portfolios, according to a recent survey by LIMRA, a worldwide association of insurance and financial services companies based in Windsor.
The survey, which was conducted in October, found that despite unusual volatility in the stock, commodity and credit markets, most consumers are sitting tight with their investments, savings and insurance arrangements.
An earlier poll in March found that only 49 percent of consumers were pessimistic about the economy.
Only 50 percent of individuals polled said they had confidence in government regulators, while 48 percent said they had no confidence in rating agencies and 46 percent expressed no confidence in stockbrokerages or investment firms.
Despite the bleak outlook by consumers, less than one in six has responded with action. For those individuals who did take action, most reallocated their assets and checked their balances. Of those who acted, 16 percent — especially younger people — took money out of their retirement accounts.
More than half of those surveyed — 53 percent — said they planned to reduce their debt in response to the economic crisis, while 41 percent said they planned to delay making investments.
Recoveries Rise 136 Percent
The state Insurance Department recovered about $1.5 million from consumer complaints during third quarter, a 136 percent increase over the previous quarter and more than the total amount recovered during the first two quarters of the year.
Insurance Department staff members received 1,362 new complaints or inquiries during the quarter, half of which were categorized as unfair claim practices. Marketing and sales complaints accounted for 12 percent of all complaints, while premium and rating complaints made up 8 percent of the total grievances.
During the third quarter, more than $1 million of all recovered funds came from complaints related to accident and health product lines, and almost $250,000 from life and annuity product lines. The remaining recovered dollars, roughly $200,000, came from complaints related to property and casualty product lines. Meanwhile, of all incoming complaints, accident and health product lines topped the list with 72 percent.
Free Check Cashing
Metropolitan National Bank in New York, through its subsidiary CashZone, is offering a nontraditional banking service to working class families in Connecticut that will allow them to convert paychecks into instantly available funds on a prepaid credit card.
The initiative, known as the CashZone Check2Card Program, will be available inside two PriceRite grocery stores in West Hartford and Bridgeport.
It is aimed at providing financial services to individuals and families that don’t use traditional banking.
The program will allow members to convert paychecks and most government-issued checks, for no charge, into instantly available funds on a CashZone prepaid Visa Card.
“This is the first step toward the financial mainstream for previously under-served consumers,” said Mark R. DeFazio, president and CEO of Metropolitan National Bank, which has four locations in New York with over $550 million in assets.
According to MarketReasearch.com, more than 13 percent of the 105 million U.S. households are considered “unbanked,” which means they do not use a bank for their financial services needs.
The unbanked are typically immigrants, ethnic minorities and younger people, all groups that DeFazio hopes to target with the new program. He said the Hispanic population is an especially attractive opportunity because of the large growth they are expected to experience in the next 10 to 20 years.
The program will also help reduce the cost of check cashing and bill paying for working class families, DeFazio said.
Greg Bordonaro is a Hartford Business Journal staff writer.
