Quote:
Originally Posted by Munchmasterman
I could argue we don’t subsidize them, we pay the same rates as they do. But it doesn’t really matter. Profits are up for insurance providers. Insurance companies have their tables. When was the last time an insurance company failed to make a profit? I’m not talking about the companies that branched out into other endeavors such as mortgages, etc. Even a Katrina evens out because 50 year and 100 year events are figured in.
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Actually insurance companies are in business of loosing money these days.
Latest S&P reports indicate that property/casualty Combined Ratio for 2011 is estimated to be 107.5%.
Combined ratio takes into consideration both investment income and underwriting profits. Well, words "underwriting profit" is pretty much an oxymoron these days. Not a single underwriting profit was recorded in the 25 years from 1979 through 2003. None. Companies operated at loss offsetting these losses by income from investing premium dollars.
In the eight years from 2004 through 2011 industry wrote profitable business only three years!
Each state has its own Insurance department that dictates to insurers how much they can raise premiums for next year based on last year's losses. So as a company you can tell to the state that you need to raise premiums 3 percent to stay profitable and they are fully capable of telling you to go pound salt. So they continue to operate at underwriting loss hoping to make it up on investment side.
Lina
