> For every dollar in home and auto premiums they collected last year, insurance companies paid an average of $1.10 in claims and expense
if you expect a service to loose money because it's more convenient for you, then you are going to have a bad time.
oh, greed exists for sure, but that's not why everybody is getting crushed right now. wages went up a tiny bit and in the last few years everything else has gone up 20-30% or more.
I've seen this before. What I haven't seen is this compared to their other revenue streams. Insurance companies are quick to total out a vehicle and then insist on getting ownership of it. They must be selling them to someone.
So 99% of the time a business’s “greed” gets written about, and there are publicly listed businesses that can be referenced, notice that no one links to the increasing profit margins to prove the greed. Because the claim is usually false.
Hmm:
> Progressive gross profit for the quarter ending December 31, 2023 was $2.665B, a 127.67% increase year-over-year.
> Progressive gross profit for the twelve months ending December 31, 2023 was $5.547B, a 224.14% increase year-over-year.
> Progressive annual gross profit for 2023 was $5.547B, a 224.14% increase from 2022. > Progressive annual gross profit for 2022 was $1.711B, a 63.64% decline from 2021. > Progressive annual gross profit for 2021 was $4.707B, a 38.19% decline from 2020.
Source: https://www.macrotrends.net/stocks/charts/PGR/progressive/gr...
GEICO:
> 2023 pretax underwriting profit of $3.6 billion
> 2023 underwriting profits for the remainder of primary operations coming in three-times higher than 2022 and more than double 2021, with written premiums growing 24.1 percent to $3.5 billion.
> P/C reinsurance operations adding another $2.0 billion in pretax underwriting profit.
Source: https://www.carriermanagement.com/news/2024/02/25/259036.htm
https://www.macrotrends.net/stocks/charts/PGR/progressive/pr...
https://www.macrotrends.net/stocks/charts/ALL/allstate/profi...
Nominal amounts are never relevant for this discussion, and it is trivial that nominal profits would keep increasing since the currency is worth less over time. Otherwise, a business would eventually go out of business due to not having sufficient cushion.
Progressive's sustained profit margins are doing just fine, other than a relatively brief blip where they only managed ~$2B profit in 3 quarters while inflation and the economy was suffering heavily throughout the country?
Allstate's issues have as much to do with their overly aggressive stock buybacks in the last couple of years. "Allstate's auto insurance profit margins were best in the industry until about 18 months ago". "A report by Crain’s Chicago Business said Allstate spent $2.5 billion on share repurchases in 2022". "“We believe it's prudent for Allstate to pause its buyback, leaving capital in the (insurance subsidiaries) while underwriting results recover, especially as inflationary impacts on severity (replacement costs, medical, legal) are still concerning,” Greenspan said in a report titled “Stop the Buyback” last October."
"Allstate is the insurance industry's most aggressive buyer of its own stock. It has repurchased 789 million shares at a cost of $42.8 billion since 1995, while issuing 154 million shares, according to its SEC filing."
Continuing to push for stock buybacks as costs rise, and continuing dividend payments are failings of its own making.
And dividends/buybacks have nothing to do with profit margin. Those are not expenses, so that money is included in profit (aka net income). From which profit margin is calculated.
Revenue - expenses = profit.
Profit / revenue = profit margin.
Which is the same as net income / revenue = net (profit) margin
Yet all the major insurers are claiming vastly profitable quarters. Someone is lying and it’s not the insurers in their SEC filings.
I'm sure this is technically true but they've carefully worded this. Most home insurance companies carry reinsurance. This means, they get an insurance policy to cover some of their losses when there is a major storm or something of that nature.
Here in Florida, it's common to see home insurance premiums doubling in the latest billing cycle. That doesn't line up with the rate of inflation.
Insurers also didn't sit on those home and auto premiums, they invested them. They also worked with re-insurers to mitigate their costs, so some of that $1.10 was "pass-through".
Other years they've paid $0.90 for every $1 in premiums they collected, but I didn't see a rate fall then.