Homeowners Insurers Not Earning Cost of Capital Despite Rate Increases

October 24, 2007

  • October 30, 2007 at 1:50 am
    Shrinivas Shikhare says:
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    If homeowner insurance cost of capital is higher than RoE, can we expect rate hike in near future to retain capital to the business ? I hope cross-subsidization of product by insurers is not happening here.

  • October 30, 2007 at 12:17 pm
    Gill Fin says:
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    When homes are insured to their actual replacement cost, profit problems go away. When actuary thinks homes are insured to value, and in reality they are not, the result is persistent problems including artificially high premiums. There is usually nothing wrong with the cost per thousand – there just arent enough thousands.



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