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re: Insurance rates up? Here's why.
Posted on 1/4/24 at 8:43 am to VandyBoysWhistler
Posted on 1/4/24 at 8:43 am to VandyBoysWhistler
quote:
Over the last several years insurance companies have paid out more in claims than they have collected in premium, especially in auto liability claims.
This story from June says the insurers have had a high loss ratio, but not that they "paid out more in claims than they have collected in premium."
LINK
The story blames a "combination of unusually active natural catastrophes and ongoing inflation-related challenges in the private auto business".
Also, my understanding is that insurers want their premiums to be pretty close to what they pay out, because their real source of profit is not premiums over payouts, it's investments. If their premiums get too high compared to payouts, that's an indication they are charging too much and a competitor will come in offering lower rates.
Posted on 1/9/24 at 10:51 pm to ExtraGravy
quote:
because their real source of profit is not premiums over payouts, it's investments
Yes. The float.
Buffet has written volumes about float.
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