Date:         Thu, 28 Sep 1995 15:47:15 -0700 (PDT)
Sender:       Vanagon Mailing List <vanagon@vanagon.com>
From:         Scott Beckstead <conrad@user.centcon.com>
Subject:      Re: Insurance Industry Regulation (L)

On Thu, 28 Sep 1995, Maher, Steve (SD-MS) wrote:

> >profits
> 
> Profits are one piece of the puzzle, but a fairly small one. The info
> I referred to, as described in the previous post, is:
> 
> 1. A record of the total the companies have taken in as auto premiums;
> 2. A record of the total the companies have paid out to claimants in auto
>    cases;
> 3. A record of the operating expenses of these companies (ITEMIZED);
> 4. A record of their profits.
> 
> These should balance out to zero, unless I left something out (quite
> possible)-- in which case the stuff I left out, should become item 5.
> 
> OR unless some money is being diverted to places it shouldn't go! If
> the balance isn't zero, this will be the first concrete indicator I have
> EVER seen, that there is corruption.
> 
> Of course, where there's this much smoke, there's got to be some fire
> somewhere. But how much?
> 
> >The 'insurance crisis' is largely a manufactured crisis to justify
> >higher rates.
> 
> So I keep hearing. I also hear at various times, that increased litigation
> and damage awards are behind it. Or Earthquakes in CA. Or flooding in
> the midwest.
> 
> But I have never seen ANY evidence for crisis manufacturing-- just
> lots of pointers. As I've agreed, evidence of corruption is by its
> nature hard to find-- the corrupt will hide, shield, destroy etc. any
> evidence against them.
> 
> And even clean, legit companies won't be too happy about releasing info--
> No. 1 and 2 above might be concealed for purposes of customer privacy,
> and No. 3. for competetiveness, even among the clean companies.
> 
> But, this information is mandatory if we are ever to clear up these
> questions. Wich brings us bak to my original point: how can we find
> this stuff out? Coyote pointed out that No. 4 (profits) are public
> record for public companies. One down, three to go.
> 
> Anyone else?
> 

In California the Insurance Commisioner is supposed to handle regulation 
of Ins. Co. profits.  They are, I am told, allowed to set their rates to 
guarantee a 15% profit margin.  This is the only industry that I know of 
that is guaranteed a profit margin.  It is also the largest legal 
gambling system in the world.  They bet you won't (Die, Crash, Injure 
someone on your property, have your car stolen etc..) and you bet you 
will!  In insurance there is no such thing as descrimination.  They set 
up their actuarials based on as many factors as they can.  Most studies 
of a statistical nature are sponsored by the insurance companies.  When 
they can they get the government to pay for the actual studies and then 
use them to hedge their bet.  Insurance is a racket but it does serve a 
useful purpose in that it can shield you from a fluke accident or even an 
act of utter stupidity that results in a hefty settlement.  However the 
legal system (civil not criminal) in the US is set up to protect the 
consumer if he can afford to pay the lawyer bills (yup in the US it's the 
best justice money can buy) that long.  My $0.02 
I still don't understand what crisis a few insurance companies lost more 
bets than they could cover and are going to hurt.  The people they 
insured are going to hurt and all our rates go up when the insurance 
companies adjust their rates to cover their loses in the (pick a disaster 
of the month).


Scott


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conrad@centcon.com  sbeckst@dpc.com becksteads@aol.com