Quote:
Originally posted by taxwonk
I think if you look at it, you'll see that premiums tend to go up across the board when things like hurricanes, which have nothing to do with lawsuits, create losses. They also go up when investment returns drop due to a falling or stagnant market. In short, premium rates for any given policy have far less to do with the risks generated by that pool than you would expect.
And I would say thaty it's not a problem caused by the insurance industry being overregulated. If anything, it's poorly regulated, not for lack of regulators so much as historically entrenched cronyism amongst regulators and regulated.
It's not for nothing that the first thing a lobbyist in Baton Rouge or Springfield asks when he finds out about a major capital project is "Who's writing the insurance?"
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Insurance is regulated at the state level (I think under some crap called McCarran-Ferguson...). You get dim political hacks overseeing regs, liquidating companies early, rehabbing companies on silly bases. Add to the lack of state govt talent (an oxymoron in itself) overseeing the industry, the fact that a lot of deals (a whole lotta reinsurance treaties) are poorly written, modified by customary dealings (often, believe it or not, handshakes) and are arbitrated under all sorts of different laws in various countries, and you have an unregulable mess.
My brief experience with the industry led me to conclude that its like a massive pool of cash, sloshing around in all sorts of directions, between brokers, intermediaries, insurers and risk trading floors, many of whom turn out to be the same party operating on different sides of the contracts through subsidiaries. The accounting is a disaster also. I don't think anyone in the indutsry could ever figure out how much money he's leaving on the table at any given moment.
I ran from that work because it was insanely frustrating. Its like being in a money hurricane and trying to grab all you can and hope you're getting ahead.
