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.
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.
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.
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.