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re: So what do insurance companies do after catastrophes like we've seen lately?
Posted on 9/21/17 at 11:27 am to lnomm34
Posted on 9/21/17 at 11:27 am to lnomm34
quote:
Do reinsurance companies buy rereinsurance? And if so, do rereinsurance companies buy rerereinsurance? And if so . . .
No. They're some of the world's largest financial institutions (GenRe for example is a major component of Berkshire Hathaway, which also is the largest single shareholder in MunichRe). They typically started as a partnership with or with a major seed investment from a major bank.
And the above is correct. Primary insurers are only on the hook up to a certain point. After that amount, everything else is paid via the reinsurance they've either purchased risk by risk or (waaaaaaay more likely) a reinsurance treaty they have over their entire book of business.
This post was edited on 9/21/17 at 11:29 am
0
Posted on 9/21/17 at 11:28 am to Homesick Tiger
quote:
Raise premiums
for their customers nationwide.
This is how pooled risk is supposed to work.
Posted on 9/21/17 at 11:28 am to JuiceTerry
There is enough money in the insurance system to keep it going through a hurricane season like this one, but there is a breaking point to the system that could be reached in our lifetimes where the storms get so destrucive there really just isn't enough money. What happens then is anybody's guess.
Posted on 9/21/17 at 11:33 am to JuiceTerry
frick everyone over
Posted on 9/21/17 at 11:34 am to LSUTigersVCURams
quote:
there is a breaking point to the system that could be reached in our lifetimes where the storms get so destrucive there really just isn't enough money
No. This is unfounded hysterics.
There's plenty of reserve for this year's losses DESPITE a historically soft market (insanely low rates). The reinsurers will be fine. This will kill their profits for a couple of quarters, but they're still very sound financially.
Next year there will be a long-overdue market hardening (higher rates) and the reserves will be replaced. The system self-regulates. Even if we entered some global warming fanatic's wet dream and storms got worse and worse, rates would just increase accordingly.
We in the upper eschelons of the insurance business are the casino. Sure, the occasional casino goes out of business, but the system is set up so that the well-managed casino always wins and actually does much better when some of the crappier casinos are mismanaged and go bust.
This post was edited on 9/21/17 at 11:38 am
Posted on 9/21/17 at 11:35 am to JuiceTerry
quote:
So what do insurance companies do after catastrophes like we've seen lately?
They get insurance for things like this.
Posted on 9/21/17 at 11:37 am to Cooter Davenport
quote:
Even if we entered some global warming fanatic's wet dream and storms got worse and worse, rates would just increase accordingly.
Yes that's right. Until the average person is not able to pay, and then until it isn't worth it for anyone to pay. And then what? Hell it's already happening in some areas see e.g. South Louisiana.
Posted on 9/21/17 at 11:38 am to Cooter Davenport
quote:
No. This is unfounded hysterics.
There's plenty of reserve for this year's losses DESPITE a historically soft market (insanely low rates). The reinsurers will be fine. This will kill their profits for a couple of quarters, but they're still very sound financially.
Next year there will be a long-overdue market hardening (higher rates) and the reserves will be replaced. The system self-regulates. Even if we entered some global warming fanatic's wet dream and storms got worse and worse, rates would just increase accordingly.
i don't think he was being hysterical. just that there is A breaking point, however unlikely we are to seeing it. if we had katrina, sandy, harvey, irma, california wildfires, etc all in to short a time there'd be a small panic i'd say. it would all even out over a few quarters, but there'd be a point where the reinsurers would start straining a bit.
Posted on 9/21/17 at 11:39 am to LSUTigersVCURams
quote:
And then what?
Then you pay up, or move. That's the free market at work in determining where you live.
Posted on 9/21/17 at 11:40 am to LSUTigersVCURams
quote:
Yes that's right. Until the average person is not able to pay, and then until it isn't worth it for anyone to pay. And then what? Hell it's already happening in some areas see e.g. South Louisiana
If the rates are too high for folks in higher risk areas, then the rates will come down for people in lower risk areas. If people moved into areas of lower risk, it lessens the risk for the entire pool. Subsidizing people in higher risk areas leads to problems with solvency - see the NFIP.
Posted on 9/21/17 at 11:40 am to JuiceTerry
file re-insurance claims
Posted on 9/21/17 at 11:47 am to JuiceTerry
Two chicks at the same time
Posted on 9/21/17 at 11:51 am to JuiceTerry
Deny claims, save money, blame lawyers
Posted on 9/21/17 at 11:51 am to JuiceTerry
All state sponsored sugar bowl and still does. Paid minimal insurance policies. But give 1000 to an extra point..
So guess they doing ok
So guess they doing ok
Posted on 9/21/17 at 11:58 am to lnomm34
quote:
Do reinsurance companies buy rereinsurance? And if so, do rereinsurance companies buy rerereinsurance? And if so . . .
It's turtles all the way down
Posted on 9/21/17 at 12:03 pm to JuiceTerry
What purpose does the word "So" in your thread title serve?
Posted on 9/21/17 at 12:22 pm to JuiceTerry
quote:
what do insurance companies do after catastrophes like we've seen lately?
They finally PAY the piper. frick insurance companies.
Posted on 9/21/17 at 12:45 pm to JuiceTerry
quote:
Do any of them just file for bankruptcy and close up shop? Do they pay out without incident? Do they work with government aid stuff?
Reinsurance is the answer. If you want to learn about wealth of a market reinsurance is... take a look at any of Warren Buffett's annual letters. Reinsurance is a big source of cash and income for Berkshire Hathaway.
The other thing to consider is... they could always get government bonds and pay the government back. When Citizens didn't have enough money to pay claims after Katrina, they simply got the state of LA to borrow money, and they assess a fee on every insurance policy in the state written by a non-surplus company to pay it back.
Citizens is a weird deal because of it's quasi-relationship with the state... but I would assume something similar would happen with any company if it got really bad.
Posted on 9/21/17 at 12:52 pm to JuiceTerry
We have precedent in the form of Allstate and State Farm in the wake of Katrina.
They screwed over as many policy holders as they could, until court decisions against them forced reasonable settlements. Then they dropped policies here in big numbers and stopped offering new policies in the region.
At the same time Allstate was giving LA policy holders the shaft and claiming they were having a tough time, we in Tiger Stadium were treated to nifty Allstate FG nets behind the goal posts.
They screwed over as many policy holders as they could, until court decisions against them forced reasonable settlements. Then they dropped policies here in big numbers and stopped offering new policies in the region.
At the same time Allstate was giving LA policy holders the shaft and claiming they were having a tough time, we in Tiger Stadium were treated to nifty Allstate FG nets behind the goal posts.
Posted on 9/21/17 at 12:55 pm to JuiceTerry
What did people do in south LA pre insurance? Did they utilize construction techniques to avoid flooding (build on piers, etc) or build homes easily rebuilt?
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