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Disasters essentially provide information that lets insurers price risk. Inflation is their chief enemy. During times without events they do bank for payout. Wh
by RA_Fisher 9y ago
Disasters essentially provide information that lets insurers price risk. Inflation is their chief enemy. During times without events they do bank for payout. When an event happens often risk is better understood and policies might be renegotiated after a disaster a la Katrina on offshore oil and gas. It happens through groups of "syndicates" at Loyds of London - basically actuaries with capital.
- gruez 9y agoif disasters provide information about risk, then the lack of disasters should also provide information. which means that insurance premiums should be steadily decreasing in years where there aren't many payouts. does this happen in practice? feels like insurance premiums only ratchet up (at least on a personal level).
- RA_Fisher 9y agoIt doesn't really at least not for my house, haha! I think it might be related to inflation so that in real terms it really does fall.