171–180 of 195 posts
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Time for a credit union version of insurance coverage.
This already exists. I believe State Farm is one of them.
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Why would society not mandate cameras to make sure the operators of thousands of kilograms of metal at high speeds are paying attention to the road instead of their phone? And to be able to punish them if they are not. Assuming pedestrian and children’s safety is a priority.
For the same reason you don't wear remotely controlled collar on your neck that paralyzes you in case you're doing something dangerous.
> The suit also cites Allstate as gathering direct car use data from Toyota, Lexus, Mazda, Chrysler, Dodge, Fiat, Jeep, Maserati, and Ram vehicles. Seems like the bigger part of the story is at the bottom. You can uninstall GasBuddy from your phone but finding and buying a new car that doesn't track you is a bigger hassle.
I like to post this investigation by Mozilla's "Privacy Not Included" whenever car privacy comes up, because it is actually horrendous. https://foundation.mozilla.org/en/blog/privacy-nightmare-on-... > Mozilla’s latest edition of Privacy Not Included reveals how 25 major car brands collect and share deeply personal data, including sexual activity, facial expressions, and genetic and health information
> Several car brands also note that it is a driver’s responsibility to tell passengers about the vehicle's privacy policies.
"Hey Bill, before we go to lunch, gloss over my Nissan's EULA."
I think I might start buying older cars and just swapping out the engine instead of putting up with the telemetry. If the car has a SIM card, I don't want it.
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I'm addressing your premise. >Selling insurance and paying claims is a sort of loss leader for the insurance industry. Now you say > I didn't say that they ALWAYS post losses And > that insurance premiums are a net money loser for the industry. This is circular. As for the article, it shows the context that the last couple years have been exceptional and core operations aren't sustainable. Your reasoning doesn't expl…
The original discussion about insurance companies accepting small underwriting losses to gain investment capital (float) refers to the traditional insurance business model operating under normal conditions. This is different from the current market disruptions we're seeing in specific high-risk regions. Insurance companies are indeed leaving certain markets and raising premiums dramatically, but this is happening bec…
I've yet to see a capital markets discussion with an InsuranceCo where someone says, "Oh! Your combined ratio under normal conditions is at/over 100%. Good job management team!" Please provide some sources supporting combined ratios >= 100% as OK/sustainable, or this will continue to be circular.
> Insurance companies are indeed leaving certain markets and raising premiums dramatically, but this is happening because...
Dude, your #1-5 just listed reasons why the core insurance operations have to be profitable, or they cease operations. That's making my point. You made no reference to their investing activities overcoming losses as you implied. If they can't price risk effectively in their core business "under normal conditions," then they will get competed out of the market.
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please see my edit about the relevance of time delay. Im curious what you will say. Using the loan analogy, I understand how a firm can make money on loans with a repayment delay. This doesnt make sense to me if the payout is >100% and the average time delay converges to 0.
No, that's not accurate. The time delay doesn't converge to 0 just because payouts match incoming premiums. Here's why: Think of it like a water tank: - The tank contains 66B gallons (total liabilities) - 30B gallons flow in annually (new premiums) - 30B gallons flow out annually (claim payments) - The tank stays at 66B gallons (stable liability pool) Even though the annual inflow equals the outflow (30B), it would s…
I get how even an immediate claim takes time to settle.
Would you agree that this puts an upper limit on the loss they can run? If more aggregate auto claims are submitted than premiums paid in a day, you can only make interest on they delay duration. If payout delay is say 3 months, annual interest is 4%, you break even at a 1% loss on premiums, right?
If you are consistently drawing down your float to pay claims instead of adding to it, you are better off leaving the auto insurance industry and simply operating an equity investment firm.
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No, that's not accurate. The time delay doesn't converge to 0 just because payouts match incoming premiums. Here's why: Think of it like a water tank: - The tank contains 66B gallons (total liabilities) - 30B gallons flow in annually (new premiums) - 30B gallons flow out annually (claim payments) - The tank stays at 66B gallons (stable liability pool) Even though the annual inflow equals the outflow (30B), it would s…
I get how you can have a profitable steady state in with equal inflow and outflows given a surplus tank. I get how even an immediate claim takes time to settle. Would you agree that this puts an upper limit on the loss they can run? If more aggregate auto claims are submitted than premiums paid in a day, you can only make interest on they delay duration. If payout delay is say 3 months, annual interest is 4%, you bre…
Of course there is an upper limit on losses they can run. The upper limit is base on their investment returns and the time frame. The time frame is longer than you think. Based on a quick run of the numbers it is measured in years.
> If you are consistently drawing down your float to pay claims instead of adding to it, you are better off leaving the auto insurance industry and simply operating an equity investment firm.
They are continually replenishing the float at the same time. The whole point is that they are operating an equity investment firm, except the investment capital comes from a revolving pool of insurance premiums instead of some other pool of money.
Earlier quoted context omitted.
The original discussion about insurance companies accepting small underwriting losses to gain investment capital (float) refers to the traditional insurance business model operating under normal conditions. This is different from the current market disruptions we're seeing in specific high-risk regions. Insurance companies are indeed leaving certain markets and raising premiums dramatically, but this is happening bec…
> refers to the traditional insurance business model operating under normal conditions. This is different from the current market disruptions we're seeing in specific high-risk regions. I've yet to see a capital markets discussion with an InsuranceCo where someone says, "Oh! Your combined ratio under normal conditions is at/over 100%. Good job management team!" Please provide some sources supporting combined ratios >…
Dude, your source shows that over a multi-decade time-span the industry loses underwriting money more often than it makes money (12/20 years), and if you tally it out in the long run, they are net negative (101.5 dollars paid per 100 in premium income). https://www.spglobal.com/marketintelligence/en/news-insights...
Of course they aren't going to congratulate themselves on losing money on underwriting in those words. The way you will see it phrased is congratulating themselves on increased premium income from sales, while elsewhere in the report acknowledging underwriting losses. Maintaining the same rate of underwriting loss while increasing sales will also increase the total loss, but it is not at all rare to see an investor report congratulating management on increased sales in a circumstance where a larger loss was made.
> Dude, your #1-5 just listed reasons why the core insurance operations have to be profitable, or they cease operations. That's making my point. You made no reference to their investing activities overcoming losses as you implied. If they can't price risk effectively in their core business "under normal conditions," then they will get competed out of the market.
You asked me to address those specific circumstances, which I noted are largely separated from the aggregate of all circumstances and markets that drive the insurance industry as a whole. You are missing my big point; the insurance industry do not get rich by charging you premiums higher than your claims. Any profits they make are slim, and normally eaten up by losses in the long term (again, see your own source). The insurance operations don't have to be profitable, and they aren't according to both your source and me.
They have to be predictable so that you can price your premiums in a way that the underwriting losses aren't greater than your investment income. Those reasons I listed are what make those policies unpredictable, un-priceable effectively, and therefore not an acceptable way to lose money.
I didn't address the fact that they make their losses back in investments because it was the whole point of my original post, and all of the sourcing that I have done; it is broadly made in the quarterly reports I linked to, as well as the letters to investors from Warren Buffet.
Per your own source and decades of investor documents, the industry posts underwriting losses constantly, and makes their profits by investing the float. It isn't a big secret.
> The suit also cites Allstate as gathering direct car use data from Toyota, Lexus, Mazda, Chrysler, Dodge, Fiat, Jeep, Maserati, and Ram vehicles. Seems like the bigger part of the story is at the bottom. You can uninstall GasBuddy from your phone but finding and buying a new car that doesn't track you is a bigger hassle.
I like to post this investigation by Mozilla's "Privacy Not Included" whenever car privacy comes up, because it is actually horrendous. https://foundation.mozilla.org/en/blog/privacy-nightmare-on-... > Mozilla’s latest edition of Privacy Not Included reveals how 25 major car brands collect and share deeply personal data, including sexual activity, facial expressions, and genetic and health information
Earlier quoted context omitted.
I get how you can have a profitable steady state in with equal inflow and outflows given a surplus tank. I get how even an immediate claim takes time to settle. Would you agree that this puts an upper limit on the loss they can run? If more aggregate auto claims are submitted than premiums paid in a day, you can only make interest on they delay duration. If payout delay is say 3 months, annual interest is 4%, you bre…
> Would you agree that this puts an upper limit on the loss they can run? If more aggregate auto claims are submitted than premiums paid in a day, you can only make interest on they delay duration. If payout delay is say 3 months, annual interest is 4%, you break even at a 1% loss on premiums, right? Of course there is an upper limit on losses they can run. The upper limit is base on their investment returns and the…
If daily claims meet or exceed the daily premium, the only time available to earn interest is between premium receipt and claim payment.
Imagine founding an insurance company and on day one you receive $100 in premiums and $100 in claims.
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I like it when unsafe drivers pay the costs of the way they endanger all of us.
If you actually have a tracking system like this (a lot of insurance companies will offer it), you'll find the bar for unsafe driving is ridiculously low. The truth is insurance agencies always want to find a reason to increase your premiums, because the law says you can't just increase the premiums for no reason. Most premiums are lower than what it "needs" to be, so if they find an excuse, they will jack up the pre…
How does this work? Are you saying all the insurance companies share data and collude to set your rate? Or they just hope you don't price shop every year or two and jump to an offering that is under the legal limit (whatever that is)? My state has over 50 auto insurance companies, so I don't see why they would have to resort to tricks like that to increase your rate in an unfair way.