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Last year nationwide home and car insurance companies paid out more in claims then they took in as premiums; https://www.npr.org/2024/03/03/12339...ters-inflation
Problem, with making home and car insurance "public" is the people with the most expensive cars and houses are rich. It would be highly regressive.
" A survey by the Insurance Information Institute last year found 12% of homeowners had no insurance, up from 5% four years earlier. Going without coverage is risky "Quote:
Originally Posted by RoooR
thats ^^ a pretty good quick read on why rates are up
lol, noQuote:
Originally Posted by XXX-er
The whole idea of insurance is that it is supposed to be an AFFORDABLE way to mitigate risk. If that's no longer true, people will be forced to opt out and roll the dice.
The idea of insurance is to finance risk and spread the cost over a larger group. The risk drives the cost unless you want it to be a gov controlled social program. Affordability is all relative. Affordable can be is the premium less than the loss it's protecting and the ratio is different for everyone. You could ask can you afford to lose whatever you are insuring without compensation? Can you afford to insure it? Can you afford to have whatever you are trying to insure? Are you willing to make a choice to sell what you are trying to insure and buy something with less value or in a less risky location?
There are four ways to deal with risk-prevent, transfer, finance and mitigate. If you want to get more philosophical, financing risk would be a lot cheaper for a lot of reasons. Eating healthy and exercising, not rebuilding in areas that are known to flood or burn, not driving cars with with $5,000 bumpers and putting your phone down (prevention). Not getting a new roof paid for by insurance for weather "damage" when the roofing company knows it's more wear and tear, having leak detectors installed on your mostly vacant vacation home, firewising your large property in the woods, etc (mitigation). Risk transfer is mostly contractual.
I live in a fairly risk free area close to a fire station and try to maintain my home. Do I want my premiums to go up because someone has a beautiful second home in a fire prone area without a staffed responding fire department nearby? I'm all for spreading risk but the question has to be what is fair. I'd be willing to pay more for that risk but I would like some fractional time in their vacation home in exchange.
There are plenty of good insurance companies that don't advertise much if at all. My experience is the companies that don't advertise generally pay claims with less hassle and have broader coverage contracts. I send my insurance premiums to those companies.
Edit-Probably a good reason for an insurance thread and let real estate be real estate.
Do you have any evidence that payout rates have changed significantly? Or is it just more expensive houses in more disaster prone areas?Quote:
Originally Posted by yeahman
Turns out inflation of construction labor, car prices and materials impact price of products that use those, weird.Quote:
Originally Posted by RoooR
As someone that works in insurance, pretty grim outlook given many states won't let you price based on the future outlook of climate change and as pointed out, more has been paid out recently than taken in by a decent amount.
Also a bunch of car safety trends that made it cheaper have been undone by for fender benders now involving expensive sensor replacements as well as people too busy on their phones to pay attention causing major upticks in severity/frequency.
Both Florida and California are reasonably fucked if they don't reform as FL has an absurd fraud/litigation rate coupled with increasing hurricane risk as waters warm while CA takes a year to approve rates that are too low by the time they're enacted.
Want lower rates? Get people to drive better and stop building in flood and fire prone zones.
PS don't lump us in with those health insurance shitlords.
Insurance rates for HOAs in condo buildings have been going crazy around here. One of our condo buildings was dropped from their insurance and had to reinsure at 5x higher rates. This means the hoa fees will be going through the roof. Apparently it has been happening all over the county at least.
old fucks on computers have just told me that you ^^ are the problemQuote:
Originally Posted by schuss
Old fucks and not understanding complex problems, name a more timeless combo. Right, I'm sure it's the marketing spend everyone already pulled back on. Sure.Quote:
Originally Posted by XXX-er
How old are the condos and what updates have been done? Condo owners hate assessments for property improvements especially when it's not for something cool like a pickleball court or pool. So, a bunch of old ass buildings that leak and burn and are much more expensive to repair than people think. Add in a board of owners that probably has no idea about construction or insurance so they don't manage not only the property very well but the finances because they don't want their personal bills to go up. Sprinkle in vague CCRs, owners trying to make a buck by STR'ing so liability hazards going up, and the fact that they won't make the tenants/owners take their grills off their balconies and patios even though it's against NFPA and almost every state fire code and yeah, insurance companies are not liking multi-family habitational risks these days. I'm glad my homeowners is with a company that doesn't write multi-family hab. They also don't write in CA or FL. Probably helping keep my premiums down.Quote:
Originally Posted by Name Redacted
Schuss, you hear about the Nationwide layoffs and moratoriums/non-renewals? Seems like a bit more than marketing budgets. The rest of you, remember the Nationwide is on your side jingle? Well not really anymore. Don't just buy the insurance you see on TV.Quote:
Originally Posted by schuss
well they ARE paying more for a case of macro brewQuote:
Originally Posted by schuss
P&C execs must have missed the payouts memo.
https://www.insurancejournal.com/app...sation-CFA.png
Insurance Executives Paid Millions in Compensation as Rates Skyrocket: CFA Findings
https://www.insurancejournal.com/new.../11/743595.htm
I'm going to build on a fault line in a tinderbox forest at the base of an active volcano so I can complain here about being uninsurable
Largest home builder CEO makes about $15m a year, largest hospital system CEO at about $15m and largest auto manufacturer CEO makes about $29m. It's easy to place blame on exec comp but maybe some of the folks the claims money ends up with could give a little too. I guess my point is most large for profit companies have highly comped leadership. The numbers above are not shocking. Look at banking during the great recession. Those dudes should have gone to jail but got bonuses instead. That stuff isn't going to change regardless about what industry we're complaining about.
I can remember IBM hiring Lou Gerstner as CEO and wondering what a guy who made shredded wheat could know about computers but he turned it around and i started getting raises again so IME Lou was worth every bit of the coin they paid him
I live in El Dorado Hills. Same County. I hope the initiative set in motion last year gets approved. I’m right on the edge of the higher risk fire map but realistically it can’t happen where my house is. A couple miles away. Absolutely!Quote:
Originally Posted by Core Shot
I got a non-renewal and went with an unadmitted carrier. My rate went up 150% and I feel lucky. With an admitted carrier it would have been more than 300% increase.
As said, it has to be affecting home sales in the area.
I like the idea in that article to allow parcel specific plans
This is how most of America works... the rich get richer, while everyone else struggles to pay the bills.Quote:
Originally Posted by Mazderati
Certainly not with people ready to carry their water.Quote:
Originally Posted by Conundrum
Not carrying water. Giving my personal view of the industry and being real (I agree that it's a bad look and shouldn't happen) that CEOs at that level may be asked to "retire early" but their replacement will absolutely be another highly comped individual.
I mean, exec comp is out of control everywhere but most took 20-30% paycuts last year as those are prior ones. As far as layoffs - yep, why I said it was grim, lost some friends in the last one and it ain't the last.Quote:
Originally Posted by Mazderati
Come on now. Many of those buildings have been there for half a century or more. Have you been to the beach down the street from where you live lately?Quote:
Originally Posted by schuss
Fuck the insurance companies. All of a sudden their fat profits aren't as fat.
That industry has been raping Americans for a long time. How about cutting your advertising budget by...hmm, let's say a billion, Geico. That may make it easier to insure the average Joe just trying to live where they grew up.
Yep. My HOA had a roof leak that damaged another unit and decided to pay out of pocket. Annoying as shit since that's exactly why you pay insurance but they were scared of getting dropped. A nearby HOA filed claims for some things and they were dropped, just like you said. There's a ski in ski out condo there that no one is touching even at 500K because the HOA/insurance is so expensive now. So I guess I'm glad my HOA did what they did..Quote:
Originally Posted by Name Redacted
There's this thing called climate change making yearly risk escalate. Being there for 50 years doesn't mean it can't get wiped out next year.Quote:
Originally Posted by jackstraw
Geico cut by nearly 500 mil, marketing budgets are the first to go.
https://www.spglobal.com/marketintel...spend-81079056
Yeah, but saying "don't build in flood or fire zones" that historically never were is Monday morning qb take. Do we expect people getting dropped to just pick up and move after x amount of years in their home. It's a suck situation all around, but the fat players can suck it up a bit. Of course they'll just cut their employees and services while the suits stay plump.Quote:
Originally Posted by schuss
Many of those buildings have galvanized pipes with a lifespan of 50-100 years if not replaced. Insurance is to hedge against uncertainty and unknown risk. If it's predictable, more insurance companies are going to forego participating.Quote:
Originally Posted by jackstraw
How old or what condition was the roof in? Probably a good move to not tip off the insurance company. They are using drones and pulling permits to check this stuff. If your buildings are ending the lifespan of the roofs, would make sense for the board to start bidding replacement. And for that ski in ski out, is there a pending cap ex assessment coming in addition to insurance.Quote:
Originally Posted by goldenboy
I was mostly referring to the dumbasses out west building in wildfire zones or some of the newer developments in seasonal swamps.Quote:
Originally Posted by jackstraw
Insurance is such a racket. They know the risks and price very favourably in their favour. If there is some massive claim, they just pass the cost over to us in next years rates. We just have to pay it. Great business. My BIL is an insurance executive dude and is basically drunk all day with clients on golf course and 5 star restaurants. probably making 7 figures a year.Quote:
Originally Posted by jackstraw
I know a couple insurance guys too. Same deal. Golf and restaurants constantly with commercial customers and they're living fat hardly "working". Great "job".Quote:
Originally Posted by xyz
To be fair, many industries have similar scenarios.
You're just describing sales.
Ha! The dinners do get old. Would rather grill and have beer after a bike ride but duty calls.
thisQuote:
Originally Posted by goldenboy
so many people just pick up the phone calling their insurance agent because they belived the commerical they saw on tv
people filing a claim for 10k to 20k in damage is crazy to me
never never never file a claim unless you really have to
How can you possibly sell insurance if you can't figure in a known risk?Quote:
Originally Posted by schuss
companies are dropping any complex with a total value of over 50 millionQuote:
Originally Posted by Name Redacted
I know lots about this shit its crazy whats going on
but like someone else said here shit box condos that no one has done the slightest updates to are a dime a dozen even in summit county
every time I goto bid or look at a condo hoa project one I ask them about money and if they are looking for the cheapest number (this is 75% of them) and if I do an estimate I clearly put at the top this is dangerous someone is going to die or this needs to be fixed asap or you have a couple years but in better terms and use big words that I get from gramerly
Welcome to state regulation. Some states mandate pricing only use historical and not projected data. Getting rate approved for the US involves fed+50 states separately, all with varying rules. It's joyful.Quote:
Originally Posted by ötzi
Agreed. And don’t buy insurance unless you have really have to. They usually fight you to death on claims anyway then jack up your rates if they do pay out.Quote:
Originally Posted by fastfred
The money I save on not buying insurance should pay for that one time I needed it.
this is a great post *except* you never do anything but transfer financial risk. IT goes somewhere. And in modern times the ultimate endpoint is the gubmintQuote:
Originally Posted by Conundrum
and people blame bumpers but there’s also the cast subframes on new cars esp EVs that are uneconomical to repair.
Thanks. I guess the term "finance it" is nuanced. If it were a true transfer, there wouldn't be a profit margin the insurance companies build in. I guess call it a transfer fee.Quote:
Originally Posted by dunfree
I do think a lot more than I should about the insurance industry. Apparently has some pretty smart actuaries and economists working for insurance companies. While the profits can be fat, those insurance companies are going to feel a pinch moving forward. They all buy reinsurance on their risk from a handful of global companies. Eventually those companies will fly a finger at the annual treaty negotiations when they can't charge enough to cover what they're looking at with inflation and climate risk. I believe the term too big to fail will come around again so you're correct, gubmint takes the risk another time. And highly comped execs will skate with bonuses again. We're already seeing insurance companies pull out of CA and FL. Admitted carriers are pulling out of most areas with brushfire scores over 75 meaning that people in the west will be insuring in the surplus markets which have no state backing in the event of insurance company default. What if the admitted markets had to stay and what would the threshold be for affordable prices for risk spread even with profit taken out? Probably less than they could charge for all but a few to be able to pay. This is going to disrupt the lending and sales industry around real estate because you need some type of collateral (an insurance policy most of the time) to satisfy loan agreements. No loans, not as many homes sold. Insurance actuaries forecast losses based on age and type of construction. Reaching the end of effective use is coming up on a lot of property. Lead and galvanized pipes leak at joints, rot in trusses, old leaky roofs, site drainage, aluminum wiring and other fire hazards in electrical systems, people leveraged and not being able to afford upkeep, doing work themselves without knowledge so probably not to code, all sorts of aging property issues that become predictable losses. Nuclear verdicts, monocoque car frames that will total an $80k car in an accident that was purchased on a 7 or 8 year note.
Really uplifting outlook trying to financially protect our current lifestyle if you're not in the top echelon of wealth. If you're those guys, time to buy some assets.
Seperation of rich and poor gets bigger quick.
Financial downgradings are hitting insurers and picking up. Worth keeping an eye on.
Pretty uplifting stuff.
Edit...or maybe the weather calms its shit down and stuff becomes cheaper and easier to repair or replace.
I probably sound like an insurance schill and if that's your take, I get it.
Looking at the bigger picture, about 15-20 years ago private equity money flew to the insurance world. Those folks usually take a 7 to 10 year ride and move to the next best thing because usually the richest folks know where to put money. PE investment in insurance has slowed and is more focused on agency vs insurer and has been for a bit. Insurers are starting to not perform. Sure, if you follow the tickers, they seem to be doing fine but the privately held agencies are doing better. Agencies are typically paid a percentage of premium. Rates rise, agency income goes with it. Actually wondering when something has to give on agency comp side.
There is a ton of M&A going on in the agency space. Some agencies more capitalized and better at it than others. Why do you think the mom & pop agencies on main street now have big national signs on the building? ROI on PE money in agency space is outperforming most other investments in the PE funds. This will continue for awhile. When you see the big privately held agencies IPO, know the gig is up.
Due to the size of the agency firms, profitability is in the larger commercial clients but is competitive to get the business. Also due to their size, they get better access, exclusivity, and contingent bonuses from the insurance companies. The problem with this is most end users in the transactional and D2C space, people buying insurance for home and auto primarily, won't get either access to the most knowledgable people with access to the best markets because those people are working on larger premium clients (personal lines and small business units operate a lot different than large commercial and high net worth), or the knowledgable agents who refused to sell out won't have access to the key insurance companies because they can't push the volume like a big house can. There are exceptions to this but true more often than not. Or the home and auto shoppers can go buy online themselves and try to figure out insurance contracts because those are easy to decipher. More to it especially on the home and auto side.
For most of us, it's about following the money and figuring out the best path forward knowing that you didn't write the rules but you still have to play.