Mattu's Tax Loss Picks

[Bird of Prey]

You're asking me about insurance?

Excuse me, car insurance?

Ok, kidding aside, let's see what do we *know* about insurance.

You are correct, in Florida you must have car insurance or they will revoke/suspend your Drivers License.

The insurance company takes your payment and puts it with everyone else's payment into a pool of money that they then "invest". In return for this they agree to "cover" any "events" as outlined in the policy you purchased. If you have the unfortunate circumstance to actually suffer an "event" you will be required to submit a "claim" to your insurance company for said "event". Your Insurance Company will then decide if your "claim" is "valid" and if so for how much of the "event" they will pay. In some circumstances they will even dictate "where" or "who" must perform the service of restoring the objects damaged by the "event".
The fees or "premiums" for this service are allegedly calculated from careful research into so large a database, covering so many parameters that it appears no one actually understands it. But somehow, after factoring in that you are a 21 year old single male with brown hair, living at home, driving a 1998 Chevy pick-up truck in Tallahassee, Florida, going to school and work, driving more than 10 miles a day and have never been ticketed or in an accident before...that you need to give them $200 a month to assume the "risk" that you will be involved in an Accident. Should that unfortunate event occur you agree to pay from your own pocket a "deductible" of $250 and they will "cap" their portion at $25,000.

Now, no one "plans" on getting in an Accident. But they do happen. Florida is a "no-fault" state so allegedly, it doesn't really matter if the accident is your fault or not. However if your accident causes your insurer to pay out too large a sum of money, you will be dropped and forced to seek insurance elsewhere.
Additionally, no one plans on getting ticketed either, but that is an entirely different discussion better suited for the Rant board.
You supposition that insurers "take bets" is an accurate one. But if you think the "house" has an advantage at the roulette wheel, you should see the advantage the insurance companies have.
The largest holder of Real Estate in the World is the Catholic Church, The insurance industry runs a very close second.
Yes, a big hurricane or a terrorist act can cause a big pay out for insurance companies. But they in turn have insurance from companies called re-insurers to help them absorb that risk. Of course they use the large pay out as an excuse for why they have to raise rates...again.

BTW, just how profitable can the insurance business be? let's just say that the heart and soul (and one Mississippi River of a cash flow) of Berkshire Hathaway is a certain talking lizard.

My feeling about insurance companies can be summed up in a simple phrase. IMO their motto...

We are in the business of collecting premiums, not paying claims.



The Bird of Prey
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