[Maypeevophy]

My thoughts:
1. Insurers can undercharge certain customers and overcharge other customers. The ones that overcharge risky customers lose the risky customers, increasing their profitability, and the ones that undercharge risky customers default.
2. Customers don't switch easily or frequently and won't switch on a dime because the price is slightly lower, thus we don't get a price reduction spiral.
3. Insurance companies actually have insurance themselves.
4. Legislation?

[Smabeabumjess]

2. Customers don't switch easily or frequently and won't switch on a dime because the price is slightly lower, thus we don't get a price reduction spiral.

Evidence please. ...do you have evidence for either of your premises?

As for evidence, I would say, why the hell does geico need so many ****ing commercials if it isn't true

[huedaanydrax]

yay! Brother debate!

Really, Kuci, is this what you do now? Post boring insurance topics?

[secondmortgages]

Also, don't forget what is done with the float... that's why you don't see bankrupt insurance companies even if the first part of your conclusion would be true. They're pulling in returns on their investments.

[AndrewBoss]

Are you ignoring false and fraudulent claims, or counting it as a part of risk?

I doubt there are enough false and fraudulent claims to really affect insurance companies as a whole. Could be wrong though but I doubt it.

EDIT: Whoah there.

According to industry studies, the annual cost of insurance fraud is between $85 and $120 billion, and is growing at a rate of 10% per year. still not sure if it even matters for Kuci's question.

I don't know the statistics but I estimate that most insurance company revenue comes from investments. Premiums may not even cover insurance claims but premiums + investments more than cover them. So no defaulting even in cases of undercharging customers

[Soassesaisp]

Are you ignoring false and fraudulent claims, or counting it as a part of risk?

Was this directed at me? If so, yes, I'm not distinguishing that sort of thing.

[Andrew1978]

pair of you? 4 people posted in this thread.

So, Kuci, any thoughts or are you just dismissing everything I said because I just have a pathetic Finance degree from a public university?

[phinno13]

pair of you? 4 people posted in this thread.

So, Kuci, any thoughts or are you just dismissing everything I said because I just have a pathetic Finance degree from a public university?

Nothing you said was relevant to my question.

[OccumCymn]

I doubt there are enough false and fraudulent claims to really affect insurance companies as a whole. Could be wrong though but I doubt it.

[brraverishhh]

Insurance companies don't default even if they regularly undercharged customers because their revenues are derived primarily from investments, not premiums.

No, insurance companies don't default because they face extraordinarily tight regulations and [at least in the United States] are compelled to purchase what is effectively reinsurance from the state I don't think this is true (the causal relationship, that is). It is a defensible claim, however.

[reachmanxx]

Looks like underwriting profitability tends to be mixed. There isn't consistent undercharging:

According to an A.M. Best Co. statistical study, the total industry registered a 104.7 combined ratio in 2008, compared with 95.1 in 2007. The combined ratio for the top 25 writers based on net premiums written rose to 102.3 in 2008 from a profitable 94.5 the prior year. Still, when there is, what's the annual return on the S&P? 7-8%? Underwriting losses, as long as they aren't too high, generally would not be a problem for an insurer.

[WelcomeMe]

Holy ****, AS, you just don't get it. The reason insurers behave the way they do - the reason they have the reserves they do, the reason they have the little equity slush fund on top, etc. - is because they are tightly regulated. Thus saying "they won't go bankrupt because they do all these things to obviate the possibility" is pointless, because the relevant issue is that they are forced to do those things.

[Morageort]

The fact that they invest the money doesn't obviate the possibility of default - in fact, certain forms of investment could substantially increase the probability - and it doesn't change the logic of the OP.

[__CVineXPharm__]

Those were supposed to be two distinct reasons - "tightly regulated" and "required to..." [obviously the latter is a subset of the former].

And my point is that "do things which reduce the possibility of going bankrupt" and "are required to do these things by law" are not related to each other causally.

[seosoftseo]

Also, Albert is a ****ing moron.

yay! Frogger comes to defend his minion Kuciwalker by calling me a ****ing moron (always with the same insults to intelligence accompanied by curse words) without saying anything as to why I am a moron. If I'm missing the forest for the trees or the mountain for the molehill or something else, that could very well be possible, but it would be nice to know why or how I am making a mistake rather than just be called a ****ing moron. I find it more productive to explain why someone is wrong rather than insult them.

[EscaCsamas]

His screen-name used to be frogger. His avatar also used to be a kitten. These are things you do not know of KrazyHorse.

And I'm sure it's easy as hell to cross streets in NYC... the traffic is at a perpetual stand-still.

[CorpoRasion]

No but half the time it slips out. Despite his name change, I remember him as Frogger. Frogger with the little kitten avatar

People keep calling me AS, Albert, Speer, etc.

[lorryuncori]

why would you call him frogger if his name is now krazyhorse? Do you really expect that to get a rise out of him?

and kittens are (often, not always) adorable, I do not condemn the use of kittens as avatars.

I was KH from my beginnings (2001) to about 2003 or so, then frogger for about a year, then KH again.

[Corporal White]

What exactly is your avatar now? It looks like a fat dude getting eaten by a polar bear.
xpost

[Julik19]

What exactly is your avatar now? It looks like a fat dude getting eaten by a polar bear.
xpost

that's a woman.

http://www.guardian.co.uk/world/gall...re%3D345847074

She was such an idiot. Jumping into a polar bear enclosure at a zoo is stupid enough but during feeding time!