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The article explains that insurance /coverage/ in the US tends to be inadequate, which has nothing to do with the pricing of insurance. My first reaction to the
by paulsutter 3y ago
The article explains that insurance /coverage/ in the US tends to be inadequate, which has nothing to do with the pricing of insurance. My first reaction to the title was surprise that insurance companies would be willing to price the risk too cheaply
- prng2021 3y agoAgreed, it’s a very poorly worded title.
- nsagent 3y agoThe article does state this though: According to the American Property Casualty Insurance Association (apcia), a trade association, last year insurers paid out $1.08 in claims for every $1 in premiums they took in.
- deleted 3y ago[deleted]
- matthewdgreen 3y agoThe business of insurance sometimes has good (profitable) years and sometimes has bad (losing) years. That’s why insurers work so hard to invest and spread their risk over multiple years. I got a dividend from State Farm during the pandemic because they had an unusually profitable year, and they re-distributed some of their profits to policyholders.
- likpok 3y agoAnother aspect is that insurance companies can make money on the float, and this can potentially let them be profitable while paying out more in claims than they take in (or at least netting out to paying out what they take in). That’s assuming that they can effectively invest the premiums. Buffett successfully applied this strategy with geico.
- mint2 3y agoErrr the pandemic profitability and refund was extremely abnormal. It was due to the lockdown where essentially no one drove for several months and then there was reduced driving for a year is so. The refunds were also not done willingly, they were done due to DOIs demanding it and peer pressure.
- lr4444lr 3y agoI wanted to fault them for this too, but it's an inescapable result. Liability premium costs always moves in lockstep with the rate of coverage, as it has to by probability laws for an insurance company to be viable.