Zero-percent interest rates aren't going to last forever.

That's pretty obvious. What's less obvious is the best way to plan for the change. One of the industries that will be particularly challenged when the rate environment changes is the insurance industry.

Insurance companies keep large investment portfolios to both keep money available to pay out claims and earn investment returns for shareholders. While some insurance companies like Markel (NYSE:MKL) and Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) -- which owns GEICO, among other insurers -- are famous for the investments they make in stocks, most insurance companies (Berkshire and Markel included) maintain hefty fixed-income portfolios.

This is a problem in a changing rate environment -- particularly one going from low to high -- because it means insurers are making FI investments with low yields today that will potentially go down in price as rates rise. And yes, besides the potential for losses as rates change, there's also the fact that buying FI instruments with low yield... well, sucks.

Today I had the chance to ask Tom Wilson, the CEO of Allstate (NYSE:ALL), what his company is doing in the face of rock-bottom interest rates. Wilson made it clear that he does think the rate environment will change, and he ticked off a number of things Allstate is doing to address this:

  1. Allstate is focusing more on owning things itself rather than lending money to the people that own things.
  2. It's being sure it's investing in debt that's likely to be paid back (he mentioned concerns he has with the finances of some municipalities).
  3. The company has shortened the duration of its portfolio.
  4. It's steering clear of European fixed income.

If you're an investor in Allstate, this provides some necessary perspective on what to expect from the company on the investing side. Specifically, a shorter-duration FI portfolio could lead to lower investment returns today, but may protect the company down the road.

But what if you're not an Allstate investor and don't maintain a largely fixed-income, near-$100 billion portfolio? There are still some interesting takeaways from Wilson's comments.

  1. Being an owner rather than a lender. To the extent that it can, Allstate is trying to own things (equity) rather than lend (bonds). Everyone's portfolio and investment needs are different, but this goes against the ostrich approach -- hiding out in bonds and shunning stocks -- that many investors have taken in the wake of the recession.
  2. Lend to those who will pay you back. Wilson was talking about this in terms of bonds and fixed income, but this can also remind us of some great equity-investing wisdom: The return of capital trumps the return on capital. Or, as Warren Buffett has put it "Rule No. 1 is don't lose money. Rule No. 2 is never forget rule No. 1."

Matt Koppenheffer owns shares of Berkshire Hathaway and Markel. The Motley Fool recommends Berkshire Hathaway and Markel. The Motley Fool owns shares of Berkshire Hathaway and Markel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.