Posted On: April 10, 2007, 1:56 pm CDT

Posted By: Actuary

It's not for me to say how much somebody else should pay or get paid, but your comment below shows why you in particular should support this bill:

"Insurance companies should have been doing this for their insureds a long time ago but instead there are large payouts to CEO's and CFO's and some investors in the billions in the form of stock option sales."

Insurers have built surplus when they could (homeowners has been a huge money loser for all of my career until very recently, and then only in non-hurricane states). However, they have been prohibited from establishing catastrophe reserves. The difference is that surplus comes from profits, out of which taxes, dividends, and yes, bonuses, are taken before the remainder is released to surplus. If catastrophe reserves were permitted, policyholder protection increases while taxes, dividends, and bonuses drop.

Take 2006, for example. Since hurricane activity was minimal, artificial profits were earned throughout the southeast, resulting in higher taxes, dividends, and bonuses. Wouldn't you rather have your insurer save that money in a liability account and decrease rates, rather than giving it to stockholders and high-paid executives?

There's something here for capitalists and socialists alike!