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What is going on with insurance rates?

Paul has it right

I forget who it was (so on one gets the blame if it is wrong....), but an insurance insider once told me that insurance companies make their money off of investing the premiums. They don't collect premiums from all their customers, then stuff that money in a mattress, hoping they don't have to pay out more than they collected - they invest it in stocks and bonds and whatever other schemes people use to make money from other money.

So....take a look at what has been going on In the financial world, and the chaos in the insurance world might make more sense....

Or not.

Paul

The insurance companies hope to make money with your premiums. But just this week I heard an investment advisor give a very downbeat forecast. He said the US economy is in the toilet, just that the average person didn’t realize it yet. But the government was running an unacceptably high deficit before Covid; now, ...
The pain of layoffs hasn’t fully hit due to bailout money, but that cannot go on forever... Insurance companies are trying to adjust to a market where they cannot make anything on investment income, so their only option is to seek higher rates from customers.
 
Yes and no. That is how insurance works. The money is invested, same thing as a bank.

But...

The increase in ratings actually began last year during the booming stock market when insurance companies were -- like everyone else -- drowning in money. So these particular rates are not the result of the pandemic-fueled economic collapse.

The problem, as insurance people have described to me, is many insurance companies offering their product across any different lines, got clobbered with claims -- wildfires, droughts, hurricanes etc etc. Since then, the problem has gotten worse with companies themselves in worse economic shape for the reasons mentioned, at least on the balance books.

So they started offering fewer lines. They simply got out of the aviation market, leaving fewer companies left to write aviation policies. And we all know what happens when there's less competition.

I haven't been able to find out for sure -- companies are very secretive about claims -- but I get the sense that aviators are paying the price for a problem not of their own making. That aviation claims were not significantly higher, at least to the point necessitating the kind of increases we're seeing.


As I might have indicated earlier, there's a yin and yang to the insurance business and eventually more companies will add more lines again , and the usual economic theories will once again prevail.

Stinks for now, though.
 
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UPDATE ON MY INSURANCE SITUATION.....

After contacting several different brokers I got two quotes which are actually slightly less than my original quote. So instead of a $950 increase, my insurance will go down by $100 with exactly the same coverage.

Kudos to Katie (Gallager Insurance) and Don (Falcon Insurance) for finding me appropriate coverage at a reasonble price. If your insurance increases a lot for no apparent reason, contact either of them. You have nothing to loose.

PS, this is my 2000th post since I joined the VAF back in 2010! :D
 
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Would you be willing to share the name of your original agency? This is not how the system is supposed to work. Alternatively, did you call the original broker, and ask why they didn’t offer the lower coverage that the two new agencies found?
 
Can someone give me their contact at Gallagher please? email?


BWI has much more competitive pricing this year than Gallagher. $1,394 quote for an RV8 from BWI vs $1,949 from Leah. Gallaghers went up by around $500 this year.

$110k hull, $1M liability, $100k each person @ zero deductible for a 55 year old with around 500hrs total and 400hrs tail wheel.

Check out BWI at [email protected]
 
Would you be willing to share the name of your original agency? This is not how the system is supposed to work. Alternatively, did you call the original broker, and ask why they didn’t offer the lower coverage that the two new agencies found?
Naaa, I find it more effective to confront them with my wallet than confront them with the INTERNET. Besides, there is no "system" they must follow for pricing. They set their prices however their business model decides. IMHO it was better for them to make 1% of 2,000 than 100% of zero which is what their business decision got them. Either that or their business model wants customers like me to "go away".

:cool:
 
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I got a notice today from AOPA where I have a term life policy, they are raising their rates 30% effective September due to high loss rates.
 
Between my 2019 policy and 2020 policy, mine decreased by $11 total premium - but I added an IFR rating and exceeded 1000 hours PIC during that time, both of which should lower my risk and likely offset the market increase. This was for my 9A with full coverage, $100k on the hull.

If you don’t mind sharing, who is the underwriter and how much is the premium?
 
Just received my renewal through Falcon (EAA), virtually unchanged. RV-7, $125K hull,$1M liability. $1342 annual premium.
 
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Hi loss rate for term *life* insurance? Are more people dying?

Have you not watched the news this year? More than 155,000 people not scheduled to die this year and predicting to reach over 200,000 by next month. If half of them had policies that's a disaster for insurance companies.
 
Have you not watched the news this year? More than 155,000 people not scheduled to die this year and predicting to reach over 200,000 by next month. If half of them had policies that's a disaster for insurance companies.

Right - and most that have died are over 85 years old or have underlying health conditions. Chances of them having a term life insurance policy is next to zero.
https://www.cdc.gov/mmwr/volumes/69/wr/mm6928e1.htm
 
Naaa, I find it more effective to confront them with my wallet than confront them with the INTERNET. Besides, there is no "system" they must follow for pricing. They set their prices however their business model decides. IMHO it was better for them to make 1% of 2,000 than 100% of zero which is what their business decision got them. Either that or their business model wants customers like me to "go away".

:cool:

I don't really understand what you're saying here to the question of who the underwriter was.
 
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