Socialiam Sucks?

[Duff Miver]

Not sure your points are all valid, as insurance companies do have to hold large reserves as required by state DOI's for solvency.

But those reserves are not THEIR money. It is money which customers pay for premiums.

Let me put it this way - health insurance companies margins were ranked 35th when all sectors were viewed - well behind many industries, including railroads. Now we are trying to reduce that even further. Who is going to invest/support these companies with the draconian restriction on profit? What about the 34 sectors ranked well ahead of insurance companies? Shouldn't they also be limited in similiar ways? That, too, would be best for the consumer, wouldn't it?

You're comparing apples and oranges again. Railroads have enormous investments of their own money before they collect a penny from their customers. Insurance companies capital comes from their customers who pay premiums before they collect a single benefit.

Sorry, Mags, but you'll get no sympathy for insurance companies. What other business do you know of which gets paid in advance and is guaranteed a profit by state insurance commissions?

Tell you what, Mags - you give me a billion dollars, I'll hold it in reserve (and collect the interest) and eventually I'll give you back $960 million. Now, go ahead, calculate my ROI. :0008

 

[Mags]

You're comparing apples and oranges again. Railroads have enormous investments of their own money before they collect a penny from their customers. Insurance companies capital comes from their customers who pay premiums before they collect a single benefit.

Sorry, Mags, but you'll get no sympathy for insurance companies. What other business do you know of which gets paid in advance and is guaranteed a profit by state insurance commissions?

Tell you what, Mags - you give me a billion dollars, I'll hold it in reserve (and collect the interest) and eventually I'll give you back $960 million. Now, go ahead, calculate my ROI. :0008

Wrong again Muff. Insurance Companies have surplus requirements that must be met before they sell a single policy. Along with capital and employee costs, of course.

And they surely aren't guaranteed a profit. Otherwise they wouldn't be 35th on the sector profitability list. Some make money each year, and some lose money each year.

Here's a better thought - show me an industry that sells a product, without knowing what the cost of the good they are selling is gonna be? It is so much easier to sell a product like a TV or a banana - you know how much it is, and what to set the price at to reach your margins needed. With heatlh insurance, you never know - claims (Loss ratio) can deviate significantly from year to year - especially for smaller companies.

The is much more risk in owning and investing in an insurance company - and as such, the rate of return should be much higher than a traditional company.

An old axiom - the riskier an investment is, the higher the required rate of return.

 

[Mags]

Tell you what, Mags - you give me a billion dollars, I'll hold it in reserve (and collect the interest) and eventually I'll give you back $960 million. Now, go ahead, calculate my ROI. :0008

Here's the problem - due to the uncertainly of health care claims, I very well may have to give you back $1.5B in claims.......

Not an easy business, that is for sure.

 

[Duff Miver]

Here's the problem - due to the uncertainly of health care claims, I very well may have to give you back $1.5B in claims.......

Not an easy business, that is for sure.

No, you will not. Insurance companies can predict what their payouts will be for the entire insured group, and for the few who are too stupid to do that correctly, the insurance commission just grants them rate increases.

Why do you think there are so many insurance companies? Because it's better than a license to steal. The Mafia doesn't make profits like insurance companies.

Now stop trying to mislead.

 

[Duff Miver]

Wrong again Muff. Insurance Companies have surplus requirements that must be met before they sell a single policy. Along with capital and employee costs, of course.

Those costs are tiny compared to the premiums they collect.

And they surely aren't guaranteed a profit. Otherwise they wouldn't be 35th on the sector profitability list. Some make money each year, and some lose money each year.

Surely they are guaranteed a profit. There are fifty state ins commissions which do exactly that.

Here's a better thought - show me an industry that sells a product, without knowing what the cost of the good they are selling is gonna be? It is so much easier to sell a product like a TV or a banana - you know how much it is, and what to set the price at to reach your margins needed. With heatlh insurance, you never know - claims (Loss ratio) can deviate significantly from year to year - especially for smaller companies.

But they do know that the ins commissions will let them charge whatever it takes to make a profit. Can you do that with bananas?

The is much more risk in owning and investing in an insurance company - and as such, the rate of return should be much higher than a traditional company.

When are you ever going to understand rate of return on sales vs rate of return on investment?


An old axiom - the riskier an investment is, the higher the required rate of return.

....

 

[Mags]

No, you will not. Insurance companies can predict what their payouts will be for the entire insured group, and for the few who are too stupid to do that correctly, the insurance commission just grants them rate increases.

Clearly you are an actuary - but I've never heard another actuary say it is easy. And the costs of claims go up every year (think Docs and hospitals and Pharma charging more each year - yes, every year) - so insurers have to increase prices to reflect this, as they do not "prefund" for Doctors/hospitals/RX increasing prices every year - otherwise they'd overcharge in year 1.

Why do you think there are so many insurance companies? Because it's better than a license to steal. The Mafia doesn't make profits like insurance companies.

Now stop trying to mislead.

Actually I'm not the one trying to mislead. When you are sitting on the outside, without a clue of how the system works, yet opine that you know what is going on, that, my friends, is misleading.

It would be like me opinining on the auto industry - and that they are "crooks" due to the high cost of cars, or how expensive good (read healthy) food is - I don't understand those systems well, so I wouldn't go around and say they are stealing.

I WOULD say, however, that those 2 industries should also be severely restricted on how much they pay for advertising and employee salaries, just like health care companies are, as it would lead to lower prices and be good for all of us!

 

[Mags]

....

Originally Posted by Mags
Wrong again Muff. Insurance Companies have surplus requirements that must be met before they sell a single policy. Along with capital and employee costs, of course.

Those costs are tiny compared to the premiums they collect.

Not true - and they have to pay a crap load in claims

And they surely aren't guaranteed a profit. Otherwise they wouldn't be 35th on the sector profitability list. Some make money each year, and some lose money each year.

Surely they are guaranteed a profit. There are fifty state ins commissions which do exactly that.

Actually, not true. You get a rate increase to adjust your rates for the NEXT year - you are NEVER allowed to go backwards and try to recoup money from the previous year. If you lost money, you lost money. Stop trying to mislead.

Here's a better thought - show me an industry that sells a product, without knowing what the cost of the good they are selling is gonna be? It is so much easier to sell a product like a TV or a banana - you know how much it is, and what to set the price at to reach your margins needed. With heatlh insurance, you never know - claims (Loss ratio) can deviate significantly from year to year - especially for smaller companies.

But they do know that the ins commissions will let them charge whatever it takes to make a profit. Can you do that with bananas?

Again, not the same thing - you are providing for a year of coverage without knowing what the costs are. A similiar analogy would be to put a price on monthly shipments of bananas - but have no idea what it will cost to buy the bananas from the supplier, AND you also have the risk that the customer will change the contract to Steaks instead (since a catestrophic claim can occur that you didn't project)

The is much more risk in owning and investing in an insurance company - and as such, the rate of return should be much higher than a traditional company.

When are you ever going to understand rate of return on sales vs rate of return on investment?


An old axiom - the riskier an investment is, the higher the required rate of return.

 

[Duff Miver]

Actually I'm not the one trying to mislead.

Clearly you are, starting right off with your assertion that a 4% profit on sales for an insurance company is equivalent to a 4% profit on cash investment in the stock market.

Surely you know better...or do you want to claim that you don't know the difference?

Either way, there's no point in further discussion.

 

[Mags]

Clearly you are, starting right off with your assertion that a 4% profit on sales for an insurance company is equivalent to a 4% profit on cash investment in the stock market.

Surely you know better...or do you want to claim that you don't know the difference?

Either way, there's no point in further discussion.

Never said they were the same. But I am saying a 4% (or less) return for insurance companies puts them 35th among all the sectors.

Insurance company profits should go up, not down given the level of risk that is involved.

 

[Duff Miver]

Never said they were the same.

Oh? Really?

How many of you would invest in the stock market, knowing that the most you would be allowed to make is 4% in a given year, but you could lose an unlimited amount on the downside? Not too many of you, I'd bet.

 

[Mags]

Oh? Really?

How many of you would invest in the stock market, knowing that the most you would be allowed to make is 4% in a given year, but you could lose an unlimited amount on the downside? Not too many of you, I'd bet.

They aren't exactly the same, but a Company looks at it's return as a % of sales (or premiums) - ala, profit margin.

An investor looks at a return on the money invested.

Very similiar concepts - not sure why you are nitpicking on this.

Doesn't change the facts - that an insurance company has very limited upside, and unlimited downside....

I guess since I already refuted the other points you made, you are now honing in on this one... which isn't helping your case anyway.

 

[rusty]

Last word anyone??I'll tell you what,I'll have it and will call this issue closed.Mags, your constant "I need the last word" is just as bad as the "bashers" you constantly call out.

Madjack said to help this site out so I'm just trying to do my part.No offense to anyone:0008 .

 

[Trench]

Heck, rarely do I see DTB calling anyone names - he typically posts info and takes a position on something - and then people reply by calling him names. I don't get it.

That has to be the most incredulous statement I've read in this forum yet. Seriously, dude... :142smilie

 

[Mags]

That has to be the most incredulous statement I've read in this forum yet. Seriously, dude... :142smilie

Sorry, just don't remember seeing it. If he has, it's probably a response to being called Blackgumby or something like that......

Most of his posts, when they start out, are factual or opinions - but I never have seen him start name calling - unless people tear into him - which is almost always the case when it is a liberal response.

I just think this would be a pretty cool forum, with diverse thoughts and ideas, if the personal attacks were left out.

 

[Duff Miver]

Mags -


:stfu:

 

[The Sponge]

Mags -


:stfu:

+1

 

[Mags]

Mags -


:stfu:

Typical response from a liberal.... whatever.

 

[Trench]

Sorry, just don't remember seeing it. If he has, it's probably a response to being called Blackgumby or something like that......

Most of his posts, when they start out, are factual or opinions - but I never have seen him start name calling - unless people tear into him - which is almost always the case when it is a liberal response.

I just think this would be a pretty cool forum, with diverse thoughts and ideas, if the personal attacks were left out.

Mags, I agree that diversity of thought is a good thing. Without it, this would be a pretty boring forum. I also agree that the name calling gets old. But to imply that DTB's just an innocent victim of angry liberals requires more of a stretch of the imagination than I'm capable of.

But Jack asked all of us to knock off the name calling and it's his forum, so I'll respect his wishes (and I have since he asked).

 

[Lumi]

I will still pick on Trench though :0008

 

[Trench]

I will still pick on Trench though :0008

Thanks Lumi. You're not really the ass eyes Scotty says you are... :toast: