Reply to Driving in MD becoming unaffordable?

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Reply to "Driving in MD becoming unaffordable?"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]It's unaffordable because of so many unlicensed and uninsured drivers on the road [/quote]

Maybe. Someone hit a family member and gave her a fake DL and insurance card. But homeowners insurance is also insane right now, so that can’t explain it all. I think it’s just greediness. [/quote]

It's all of the claims the companies have had in last 5+ years.  Hurricanes, fires and floods are expensive.  That is why it's damn near impossible to get home insurance in Florida and rates have skyrocketed in fire prone areas.  Insurance companies are in business to make money, if they are loosing money due to claims they have not choice but to raise rates.

Yes some is greed (execs get paid a lot), but majority is the vast increase in catastrophic claims due to natural disasters.

[/quote]

No, your auto insurance rate isn't impacted by rising home insurance claims. They're separate risk pools. [b]Insurance companies don't make money from just excess premium payments versus payout. They make money by investing the majority of the premiums.[/b] [/quote]

Correct.  Off-topic but this is just interesting to me. Insurance companies generally have a very high "loss ratio," i.e. the amount they pay out in claims divided by the amount of total premiums they take in.  In the case of life insurance companies, this figure sometimes approaches 100%.

Where they make their money is on their "float," the premiums that they have collected but that will have to be used to pay out claims at some later point.  In the meantime, they get to invest that money and keep those returns.  That's why the greatest investor of all-time (Buffett) is heavily into insurance and owns Geico and lots of other insurance operations.  He gets to "borrow" lots of money at a 0% interest rate and use his skills to invest the money better than anyone else.  It's kind of like why banks give you free checking and savings accounts - you store your money with them and then they can loan it out to small businesses (banks can actually loan your money several times over, but that's another topic).

Isn't that cool to know??[/quote]

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