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Insurance is insurance whether for healthcare, auto, home etc. Gouge the consumer while posting record profits and place the blame elsewhere.
So, Thomas…what was the profit percentage of your employer or your company’s industry over the past five years? More than a 10% profit? If so, you and your peers are gouging your customers more than most insurers.
A few years back, the Western World experienced something called financial convergence. In essence, brokerages, banks, and insurers were all supposed to merge into big financial conglomerates that would handle all your financial needs. But interestingly, few of the banks and brokerages became involved with insurers, and those that did largely abandoned the insurance company side. Why? Because the financial results of property and casualty insurers is erratic, and the regulatory burden too high. It was easier to acquire insurance agencies, take the revenues from selling insurance, and leave others to do the hard work of running an insurer. Buffet made it work by not becoming involved, too much, in the insurer business.
So, again, if your industry has a long-term after tax return of more than 10%, you’re doing better than most insurers….
Most insurance companies are counting on the fact that you won’t go shopping when they raise rates.
They also make it painful with little tricks like hidden bundle triggers, like they won’t provide an umbrella policy if you don’t have ALL your coverage from them.
So, Dan, what is an umbrella policy? Its insurance coverage in excess of that which you’ve purchased which gives you access to higher limits. Maybe $1M, maybe $2M. It covers liability, usually, from your operation of your vehicle, and losses at your home or business property. For this you are charged maybe a few hundred dollars. By making certain you are insured for the layer below the umbrella, with a suitable insurer, and to make the total revenue stream enough to pay for the total limit exposure, insurers usually require you buy all the cover from them. Otherwise, you’re asking for $1M in additional limts for less than $250. How often would you take that bet? 400 people have to buy at $250 for the umbrella to cover one $1M loss.
as for not shopping, if you’re just in it for the rates, you’re missing out on things like matching coverage between companies, claim handling differences between companies, and in some case, long-term premium advantages. But if you’re just buying on price, I wish you luck.
It is legal to shop your insurance. Apparently many of us (including me) don’t do this very often. But hey, let’s use this as an opportunity for more government intrusion in the economy.
Kent: insurance, especially personal lines insurance (your car, your home) is already one of the heaviest regulated industries in the country. In most states, those rates are approved by the Insurance Commissioner’s Office before being charged to an insuer. Its not like an insurance executive wakes up one day and decides to start charging more. Months of preparation go into a rate increase request. Commissioners usually hold public hearings and invite public comment.
Okay, so a 62% pure loss ratio (measuring only what is paid for claims) means the company has 38% of revenues to pay for operational expenses such as staffing payroll (including the claim department staff), employee benefits, sales commissions (10-15% of total premium sold), advertising, computers, new AI systems, outside lawyers and outside claim adjusters, and all the other expenses. Plus an insurer needs to budget for an increase to surplus each year (sort of a retained earnings account) so it can continue to pay claims in the future. Think about your own non-insurance business? What percentage of the revenue stream is devoted to cost of goods sold (essentially, a claim payment is the good sold by an insurance policy). Is it more than 60%? Is it 80%? Or is it generally less?
Suddenly insurance company finances look a lot less evil…
Guess we know what industry Timothy works in lol
It’s evil to charge exorbitant monthly insurance premiums higher than most car payments just to cover all of the uninsured motorists out there crashing into insured motorists. Something needs to be done other than passing it along to insured motorists!!