Are the insurance companies crazy?

A lot of variables come into play, but here in SoCal it's pretty much unanimously expensive as all hell.

I'm 31, only one traffic violation in the last 5 years, no accidents and I pay $125/month through Esurance for (standard) complete coverage and a $1000 deductible. About the best deal I could find.

My brother even works for Geico and with the family discount rate, the same coverage through them was over $150

 

That's not true. When an insurance company takes in premium they hold that money until there is a claim. We're talking millions or billions of dollars. During that time they invest your money and that's where a vast majority of the insurance companies' profits come from. That's why insurance went up so much between 2008 and last year. There were no good investments.

Think about what a company that takes in $1B in premium (which is a pretty small insurance company) can earn during a year even if they payout $1B in claims by year's end.

$1B @3% = $30,000,000
$1B @5% = $50,000,000

If a major insurance company pays out 98% of what they took in during a year including employee salaries, that's generally considered a good year. Insurance companies often turn profits even paying out $1.02 or $1.03 for every $1.00 they bring in. That's how the insurance business has worked for decades if not longer. There is so much competition in the industry and so much regulation that earning a straight underwriting profit of 50% will never happen.

 

I'm in MN and traded a 2001 Taco in for a 2015 TRD OR. Insurance went from $67/mo to $76/mo. 46 years old, no blemishes on the record. I get a discount for having my home insurance with them (Farmers) and having good credit. I don't know why the good credit would give me a discount, but hell I'll take it.

 

do policies ever just drop for your customers, or do they have to ask?

Well, if you never have any issues. but we do not live in a perfect world with perfect people.

 

Do you mean does the premium ever go down or are you asking if the policies ever cancel without them asking?

 

Premium going down. My experience they go up and dont go down until you change companies.

 

Bingo. My experience exactly, and my record is spotless.

 

You're just special. While insuring a $40k truck isn't going to be cheap, I'm at about $100 per month for full coverage with pretty high limits.

 

If it helps I pay $450 for a DCSB V6 4x4.


For 6 months with USAA.


But then I'm 44 with no at fault accidents and no tickets since 19 (knocks on wood)

 

They do go down, but something has to change in your specific situation for it to happen. Insurance companies rarely decrease premiums across the board because the margins are so tight.

An insurance policy is a contract with a specific lifespan. It's usually 6 months. Certain things can trigger the policy to be rerated midterm but most rates change at renewal which is technically the beginning of a separate contract.

If your policy renews and you are now older, the rate may change. It generally starts out high when your young, bottoms out when your about 35, then starts going up again when you get old enough that you might start doing things like mistaking the gas for the brakes and driving through a hair salon. It can also go down if you've been surcharged for a claim or violation and that violation gets old enough not to count anymore. Insurance companies usually charge for claims and violations for three years but it won't fall off off your rates until your first renewal after it's three years old. If it becomes three years old in the middle of your term or you have a birthday, you won't see the rates reflect it until renewal. Many insurance companies run credit reports at every renewal. If your credit rating improves, your rates can go down but again only at renewal.

The reason changing insurance carriers can lower your rates has a lot to do with what they call the insurance (or underwriting) cycle. For whatever reason, there is a definite cycle that impacts insurance rates for any single company. The cycle usually runs about 7 years. An insurance company will decide to grow and to bring on new clients they have to have cheap rates and lax underwriting. They basically buy business and increase the number of clients on their books. After a few years of not underwriting risks as carefully they start to lose money and then have to increase rates to compensate. That drives off clients of course. The company takes a few years to get their numbers in order and as soon as things look good again they forget the lessons they should have learned before and start buying business again.

For some reason, this cycle has gone on for almost a hundred years. Very few insurance companies are lead by CEOs that take a slow-and-steady approach.

If a company is in the grow-at-all-costs mode then the rates will reflect that and you'll be able move to that company and save a lot of money. After a few years your rate will start creeping up until your current rate is much higher than a different company that is trying to grow.

 

Wut? The market has been setting records for the last several years, and there have been no good investments?

 

If by several years you mean two, then you're probably right. You have to remember that I don't see internal numbers until the end of the year which hasn't happened yet. The 2015 calendar year may have been pretty good. It may have even turned part way through 2014, but the industry had few options for safe investments from 2008 through mid 2014 at the earliest.

You can be skeptical all you like. It doesn't mean that I'm wrong. How long have you been in the insurance business?

 

140 a month with statefarm

 

you are paying for other A hole drivers with no insurance

 

I'm not in the insurance business. I just contribute to their billions of dollars. If they had any ethics at all we wouldn't have to constantly change companies to save a dollar because they have gouged us into doing so. I've got no sympathy whatsoever for the insurance industry. The top insurers in this country are worth a combined fortune. The cost of health insurance alone is a disgrace in this country. You can spin how they are not making any good returns on investments all day long.

 

That is a really good point. How much of your premium depends on the number of uninsured drivers on the road and varies from state to state. Most people think that the number of uninsured drivers is only a problem in the states that border Mexico, but from what I've seen Kentucky is one of the worst. The rates in Kentucky are multiple times the national average with many companies and it's in part due to the number of uninsured drivers.

 

same goes with Medical insurance your rates are high cause your paying for the unInsured

 

We can agree on health premiums to be sure. I personally believe the underlying cause there is the medical system and shady billing practices but I'm not in either of those businesses and can't speak intelligently about either one. There's something a little odd about a hospital billing one person $1000 for a procedure and another person $100 for the same procedure just because they work for a company that uses that hospital as a 'Preferred Provider.'

 

the insured person that was billed$1000 was billed more to cover the cost of the uninsured person at $100

 

Actually, it's usually the other way around.

When I get my bills for medical services it usually breaks down like this:

$1000 for the procedure
- $900 PPO discount
= $100 billed to the insurance company

Of that $100, I pay 20%.

What that really says is that their normal rate for anybody walking in off the street is $1000 but your employer has a contract with us and we are the sole healthcare provider for everyone that works there so we'll knock off 90% before we even charge your insurance company a dime.

The uninsured person gets the bill for $1000 and they just usually don't pay it and it goes to collections.