This is money that should be going back to policyholders to keep rates from skyrocketing Instead it’s going to Wall Street because insurance companies took the quick cash and left their policyholders holding the bag
Tera –
I’ll excuse your comment for simply ignorance. Money returned to the insurance company is called subrogation. It goes right to their bottom line and directly impacts their profitability. What occurred here is the carriers, rather than take the risk of getting the money returned from the responsible utility company, sold their claims off to investors for 35 cents on the dollar. The investors waited it out and received much more, thus their profit instead of the insurance companies receiving much more. It’s the carriers right, but then don’t complain about the risk with wildfires and requests giant rate increases from the CA dept of insurance.
Fast Eddie – Apparently your comments are simple ignorance. You don’t seem to understand insurance or math.
“Money returned to the insurance company is called subrogation.” False. Subrogation is the assumption by a third party of another party’s legal right to collect a debt or damages. It is a legal doctrine whereby one person is entitled to enforce the subsisting or revived rights of another for one’s own benefit.
“…insurance companies took the quick cash and left their policyholders holding the bag.” A ridiculous statement designed to get other people to share your hatred of carriers. In order to secure the right to subrogate, they would have had to pay their policyholders’ claims. They didn’t leave them with nothing, as your statement implies.
“…sold their claims off to investors for 35 cents on the dollar.” Which means the insurance carriers took a loss of 65 cents on the dollar, of a claim where they paid a dollar. They were not made whole by selling their subrogation rights. Their decision to sell the subrogation rights can be argued, but was sound. They can’t play long games like a hedge fund. They actually have to pay other claims.
You sound like an executive who works for one of these carriers. I understand the legal doctrine of subrogation. Bottom line, the carriers sold their recovery claims to third parties and took less money then they were entitled to recover. They could have put the work in, been patient and received much more in recovery funds. This money ultimately flows back to the policyholders. If you pay a claim at 100%, but are entitled to that money back from another source and instead sell it off for much less, you took more of a loss then you legally had to. And, since when can’t carriers play the “long game”? These are billion dollar companies, with market caps higher than any hedge fund or any individual. If anyone can play the long game it’s insurance companies. Ask any policyholders who had to wait years for money they were legally entitled to through litigation whether an insurance company knows how to play the long game. Save your excuses and sympathy for the people who need it…the wild fire victims, not the carriers who take in millions in profits every year and then look to government institutions to bail them out when things don’t go their way.
Fast Eddie,
The insurance companies job is to indemnify their policyholders, and pay for a covered claim. Not wait and see what’s going to happen in a insane situation like the CA wildfires that have no precedent. You’re looking for the insurance companies to do what the government is supposed to do. Insurance companies have other policyholders to worry about and other claims (not just wildfires) to pay. Hedge funds are gamblers who don’t have to meet all of the same regulatory requirements as an insurance company.
Maybe you should be re-directing your ire at PG&E, the CA legislative and/or regulatory bodies that created an environment for this mess to happen in the first place?
This is money that should be going back to policyholders to keep rates from skyrocketing Instead it’s going to Wall Street because insurance companies took the quick cash and left their policyholders holding the bag
Subrogation does not enrich the insurance companies. It enriches whoever buys these rights to file suit and gain later.
Tera –
I’ll excuse your comment for simply ignorance. Money returned to the insurance company is called subrogation. It goes right to their bottom line and directly impacts their profitability. What occurred here is the carriers, rather than take the risk of getting the money returned from the responsible utility company, sold their claims off to investors for 35 cents on the dollar. The investors waited it out and received much more, thus their profit instead of the insurance companies receiving much more. It’s the carriers right, but then don’t complain about the risk with wildfires and requests giant rate increases from the CA dept of insurance.
Fast Eddie – Apparently your comments are simple ignorance. You don’t seem to understand insurance or math.
“Money returned to the insurance company is called subrogation.” False. Subrogation is the assumption by a third party of another party’s legal right to collect a debt or damages. It is a legal doctrine whereby one person is entitled to enforce the subsisting or revived rights of another for one’s own benefit.
“…insurance companies took the quick cash and left their policyholders holding the bag.” A ridiculous statement designed to get other people to share your hatred of carriers. In order to secure the right to subrogate, they would have had to pay their policyholders’ claims. They didn’t leave them with nothing, as your statement implies.
“…sold their claims off to investors for 35 cents on the dollar.” Which means the insurance carriers took a loss of 65 cents on the dollar, of a claim where they paid a dollar. They were not made whole by selling their subrogation rights. Their decision to sell the subrogation rights can be argued, but was sound. They can’t play long games like a hedge fund. They actually have to pay other claims.
You sound like an executive who works for one of these carriers. I understand the legal doctrine of subrogation. Bottom line, the carriers sold their recovery claims to third parties and took less money then they were entitled to recover. They could have put the work in, been patient and received much more in recovery funds. This money ultimately flows back to the policyholders. If you pay a claim at 100%, but are entitled to that money back from another source and instead sell it off for much less, you took more of a loss then you legally had to. And, since when can’t carriers play the “long game”? These are billion dollar companies, with market caps higher than any hedge fund or any individual. If anyone can play the long game it’s insurance companies. Ask any policyholders who had to wait years for money they were legally entitled to through litigation whether an insurance company knows how to play the long game. Save your excuses and sympathy for the people who need it…the wild fire victims, not the carriers who take in millions in profits every year and then look to government institutions to bail them out when things don’t go their way.
Fast Eddie,
The insurance companies job is to indemnify their policyholders, and pay for a covered claim. Not wait and see what’s going to happen in a insane situation like the CA wildfires that have no precedent. You’re looking for the insurance companies to do what the government is supposed to do. Insurance companies have other policyholders to worry about and other claims (not just wildfires) to pay. Hedge funds are gamblers who don’t have to meet all of the same regulatory requirements as an insurance company.
Maybe you should be re-directing your ire at PG&E, the CA legislative and/or regulatory bodies that created an environment for this mess to happen in the first place?