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SunriseSurprise t1_j25lb47 wrote

What risk is there in a mostly-car-insurance company when car insurance is mandated by law in many places, and they can increase prices at will and blame inflation? Sure if they're taking all that money and throwing it all on black, there's some risk there, but Progressive has been and continues to kill it in the car insurance industry and there's not really a risk in that industry. That's probably why they keep going up like they do and with reliably going up, why puts a year out are cheap.

Sometimes that's where the opportunity is, but there'd need to be some type of catalyst to knock them down and I don't know what that'd be.

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4troglodyte t1_j27dzj2 wrote

Each State has an Insurance Commissioner and each Insurance Company Admitted to their State MUST make rate filings that are either approved or denied by the Insurance Commissioner. For example, in California the Insurance Commissioner is not approving rate increases filed by Insurance Carriers seeing adjustment for inflation impacts on auto repair parts/labor, replacement vehicle costs for totaled vehicles, supply chain delays in repair that increase rental car expenses, and other factors. Insurance company’s are not altruistic and if a profit isn’t possible in a market, let’s say Florida or California, they will exit that marketplace. To say there is “some risk” for Progressive and others being hamstrung by Departments of Insurance is a gross understatement.

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Cgable01 t1_j25ykod wrote

Insurance companies have a combined loss ratio For example Progressive spends $1.14 for every dollar they bring in via direct written premium (I didn’t look it up but it’s around that with most carriers).

Their money comes for their investments which make up for the loss.

I would expect that ratio to actually rise as insurance rates are increased due to the increase in car price and other associated costs like providing rentals at higher rates and for longer periods due to delays in parts and labor.

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0dteSPYFDs t1_j27c0e8 wrote

That’s way higher than average. Generally, you want your combined ratio under 1. Also, more so than the property, social inflation has been one of the main drivers of increased loss costs. Liability claims are far more costly for carriers than properly claims.

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