Tort Reform Scaremongering is Untrue, study finds

[Sikander]

Insurance companies got spanked in the stock market and have been sucking up money from every source they can for almost 5 years now.

[Bosh]

Originally posted by Sikander
Insurance companies got spanked in the stock market and have been sucking up money from every source they can for almost 5 years now.

Link?
Why would problems in the stock market result in so much higher premiums?

[Sikander]

Originally posted by Boshko

Link?
Why would problems in the stock market result in so much higher premiums?

It's been in numerous news stories over the past few years. The reason that insurance companies were vulnerable is that their main profits come from the time value of the money that they take in as premiums and pay out as claims. Like many they got greedy in the 1990s (and quite profitable) and invested a much higher percentage of their capital in the stock market, a tendency which was helped along by the convergence at that time of most types of financial companies.

In fact I'm sure that some of the impetus of the stock market was caused by these huge capital flows from previously more conservative and tightly regulated insurance companies. As many of them merged into larger financial services companies they tended to become more and more involved in aggressive stock strategies (which was beneficial to the larger company even as the insurance branch became exposed to much greater volatility). Those companies who wished to remain more conservative saw their stock prices drop as their profitabilty lagged, and they became targets for takeovers / mergers themselves or were less and less able to compete for customers (ie cash flow sources).

When the stock market bubble burst the insurance industry was hit very hard. Fortunately for them they were all hit hard pretty much across the board so that they all had to raise premiums in order to stave off insolvency. Had enough of them kept their noses clean they could have put the others out of business by being able to offer a much cheaper product.

[Lefty Scaevola]

Originally posted by Sava
I'll try to discredit them by demeaning their occupation.

Discredit? I found his statment grostesquesly flattering to the evil scum plaintiff's attornies.

[Bosh]

Originally posted by Sikander


It's been in numerous news stories over the past few years. The reason that insurance companies were vulnerable is that their main profits come from the time value of the money that they take in as premiums and pay out as claims. Like many they got greedy in the 1990s (and quite profitable) and invested a much higher percentage of their capital in the stock market, a tendency which was helped along by the convergence at that time of most types of financial companies.

In fact I'm sure that some of the impetus of the stock market was caused by these huge capital flows from previously more conservative and tightly regulated insurance companies. As many of them merged into larger financial services companies they tended to become more and more involved in aggressive stock strategies (which was beneficial to the larger company even as the insurance branch became exposed to much greater volatility). Those companies who wished to remain more conservative saw their stock prices drop as their profitabilty lagged, and they became targets for takeovers / mergers themselves or were less and less able to compete for customers (ie cash flow sources).

When the stock market bubble burst the insurance industry was hit very hard. Fortunately for them they were all hit hard pretty much across the board so that they all had to raise premiums in order to stave off insolvency. Had enough of them kept their noses clean they could have put the others out of business by being able to offer a much cheaper product.

thanks for the info, much appreciated.

[Agathon]

Discredit? I found his statment grostesquesly flattering to the evil scum plaintiff's attornies.

I thought you were a lawyer?

Are you a persecuter?

[Lefty Scaevola]

Originally posted by Agathon
I thought you were a lawyer?

I am the best kind of lawyer,



retired.

[Agathon]

Come on... we all know that comes in second to "dead".

At least you have time for fishing. I wish I did.

[Zkribbler]

Insurance rates are climbing because insurance companies invested their money in Enron, Worldcom and the dot.com bubble. They have to make up the shortfall from somewhere.