ALL - All State PE 12 Yield 1.97%
PGR - Progressive PE 17 Yield 0.16%
TRV- Travelers PE 13 yield 1.7%
HIG - The Hartford PE 11 yield 1.88%
CB- Chubb PE 12 yield 1.29%

Not saying they couldn't and shouldn't run their business much more efficiently, but it costs money to process $48B in claims. There will always be overhead that your premium has to cover.

Ferris Wheel Allstar said:

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The Silverback said:

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This is an uninformed post.....research combined loss ratios for the last couple years on home owners policies in Texas for the major companies. Losses are in the billions. I think just State Farm alone lost something like $4B

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well, maybe they shouldnt pay every effing fraudulent claim instead of fighting it.

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Bingo.

htxag09 said:

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FWIW State Farm's Income from premiums in 2023 was $57B. They paid out $48B in claims. They "lost" money because they have over $6B in "expenses for paying claims" and over $12B in "service and admin fees".

But going back to the OP, you think it's a scam and there is money to be made just self insure. Especially if you "own quite a few homes/buildings." Maybe get cheap policies to help in the event of a total loss or fire.

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Brother if you only knew. Don't even go there with State Farm. I lost almost $1M in "earth movement" damage a few years ago when they didn't stand up to the test (we even had a rider for this). It was a newsworthy lawsuit that we ultimately gave up on and still today are paying out of pocket. But since you will likely chime in with a "well since you lost you obviously were in the wrong", I won't debate further. I had yet another battle that was more important to us (loss of my son) that we didn't have the bandwidth to deal any further with goliath.

The bottom line is that they hedge their risks with massive premium hikes of the stable, low risk consumers which I propose because it is easier than fighting fraud.

lol if you knew me at all you'd know I'd never say that. But solid assumption.

My point still stands, though. If you think it's a scam, why not self insure? Or partially self insure (protect from catastrophic loss only)?

You have multiple properties to spread the risk.

Obviously unless you're borrowing for the properties. And in that case, seems right the company who's money it is would have a say.

htxag09 said:

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lol if you knew me at all you'd know I'd never say that. But solid assumption.

My point still stands, though. If you think it's a scam, why not self insure? Or partially self insure (protect from catastrophic loss only)?

You have multiple properties to spread the risk.

Obviously unless you're borrowing for the properties. And in that case, seems right the company who's money it is would have a say.

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Never say what? That insurance companies need more accountability.

So many responsible, low-risk, homeowners (especially the lower/middle income) shouldn't have to suck it up and self-insure just because the insurance companies roll the dice on beach properties. I know that is hardly a drop in the bucket so don't go running with that statement that is intended to drive a point.

We hold a broad range from zero to near insane policies here and there and I completely understand the concept of what you are getting at with self-insuring, but in your bold defense of the modern-day-tax-collectors, you are missing the point that we have to reel in these oligopolies.

And don't even get me started on health insurance companies...

I'd never say what you quoted me as going to chime in with: "well since you lost you obviously were in the wrong"

Not sure why they don't handle it on the front side with code upgrades requiring more hail-resistant roofing.

The issues with the hurricane prone areas are another situation entirely. People didn't use to build multi million dollar properties on the beach because you would be an idiot to do so. Now we just insure it for when it gets knocked down.

Let me just close with this - we need insurance reform.

The industry will eventually correct itself, its just going to be a shift from what we are used to. Basically we (Homeowners) are going to share a much bigger portion of the risk on roofs. 2% or higher deductibles, Actual Cash Value, etc.

I think eventually we will also then see a change in construction, pretty asinine its common practice to put on a roof that cant withstand storms which are now common place.

The one thing not being factored in that could easily bring insurance costs down is a fall in replacement cost, AKA a fall in home prices. Nobody thinks its possible, but it is. Maybe not soon. But all of this is linked. If insurance premiums have to rise to such an extreme level that people cant afford it and you hear calls for government regulation of an indstry that is struggling to maintain profitability, a natural economic answer is a fall in demand for housing and property in general.

Ag92NGranbury said:

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BRK.A

or

BRK.B

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Uncle Warren is undefeated. Lots of people listen to his advice and try to mimic his approach. Or you can just buy his shares. I hoard them. Every 2 weeks on payday buy another share or two.

JSKolache said:

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Ag92NGranbury said:

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BRK.A

or

BRK.B

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Uncle Warren is undefeated. Lots of people listen to his advice and try to mimic his approach. Or you can just buy his shares. I hoard them. Every 2 weeks on payday buy another share or two.

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Smart!

Insurance companies are always broke and the ones selling it have more money than they know what to do with. Maybe that's part of the problem.

JSKolache said:

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Ag92NGranbury said:

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BRK.A

or

BRK.B

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Uncle Warren Compounding interest is undefeated.

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FIFY

I had a different concept in mind a while ago on insurance investing. My baseline assumptions -- rates keep going up, claims experience is very volatile, and it's hard to differentiate good from bad operators.

My theory: Insurance carriers/underwriters are not where it's at (due to claims volatility), the brokers who sell the product is where to invest. Commission rates are somewhat static, so as rates increase, their income increases without a necessary increase in expenses (margin expansion). The problem is that a lot of independent brokerage houses are private or closely held. The listed companies are usually the mega-commercial brokers, who usually don't have the retail component where this approach would be most enticing. But, it still may be a preferable trade compared to the insurance companies themselves. The top 10 US insurance brokers (per a Google search):

• MMC, AON, AJG, WTW, BRO, ERIE, CRVL, BWIN, CRD-A, TWFG (7 of the 10 rated a BUY by analysts)

I know we have some insurance brokers on here, so maybe they can chime in on which among this list are the best operators, but also others we should consider. Bigger isn't always better.

If I were forced to invest in an actual insurance underwriter, I'd probably consider BRK.B or a multi-line carrier that also has more stable lines (life, health, retirement, etc.) to offset catastrophe losses inherent in property/casualty lines.

Roof replacement is the biggest racket in insurance and I don't understand how nothing has been done about this unless it's primarily a flyover state problem due to weather patterns. Maybe it just hasn't caused enough of an uproar with voices that matter.

However, we are part of the problem on the oceanfront property side of things. I'm not sure I have the stomach for it after our first full hurricane season but here we are. Would rather be at elevation but then you have wildfires to worry about on that front.

Heineken-Ashi said:

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mhnatt said:

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Let me just close with this - we need insurance reform.

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If it's government intrusion you are asking for, prepare for it to get worse, with less competition, less providers, and more expensive. History shows no other reality.

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People don't seem to understand that a big part of the problem IS government intrusion. Insurance is a regulated industry. State insurance commissioners require "low risk" investments, which basically puts them heavy into fixed income. For long time, we have had artificially low interest rates on fixed income. When those investments, usually held for a longer term, were all of a sudden creating huge losses because rates started ticking up, that destroyed the profitability. Remember that insurance company profit is basically [Premiums - losses - other expenses +/- investment income]. When investment income is low and also impacted by MTM losses, the portfolio managers keep those low coupon bonds, etc. until maturity instead of realizing the losses.

The regulation is the reason that so many insurance companies went to reinsurance (generally not regulated near as much) to try to make back those losses. The only way to fix it is to quit keeping rates down and then let it fix itself as those low rate investments mature and turn over to new, higher rate investments. It's pain that no one wants to deal with.

I bleed maroon said:

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I had a different concept in mind a while ago on insurance investing. My baseline assumptions -- rates keep going up, claims experience is very volatile, and it's hard to differentiate good from bad operators.

My theory: Insurance carriers/underwriters are not where it's at (due to claims volatility), the brokers who sell the product is where to invest. Commission rates are somewhat static, so as rates increase, their income increases without a necessary increase in expenses (margin expansion). The problem is that a lot of independent brokerage houses are private or closely held. The listed companies are usually the mega-commercial brokers, who usually don't have the retail component where this approach would be most enticing. But, it still may be a preferable trade compared to the insurance companies themselves. The top 10 US insurance brokers (per a Google search):

• MMC, AON, AJG, WTW, BRO, ERIE, CRVL, BWIN, CRD-A, TWFG (7 of the 10 rated a BUY by analysts)

I know we have some insurance brokers on here, so maybe they can chime in on which among this list are the best operators, but also others we should consider. Bigger isn't always better.

If I were forced to invest in an actual insurance underwriter, I'd probably consider BRK.B or a multi-line carrier that also has more stable lines (life, health, retirement, etc.) to offset catastrophe losses inherent in property/casualty lines.

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I own an Independent Agency in Austin, started from nothing 15 years ago. Its a **** ton of work and you have to be able to grind to get ahead. We also have to roll and adjust with the industry as it changes. I have lost 6 carriers to write home insurance with over the last year. And virtually everyone else has greatly restricted what they will accept now. That being said my goal is to sell in the next few years where there is a pretty big market of private equity companies that will pay up to 6-8 times EBITDA. So can be rewarding if you stick to it.

That being said not sure how someone can invest in retail agencies?

Weather is not a lame excuse, by the way.

And for every person griping about insurance companies just paying and not fighting, there are 15 people pissed off if they aren't getting a new roof and suing the insurance company, which costs a lot more .