I'll never figure out how insurance companies operate.

[asterix]

Not really, no. Some of their profit comes from investments, but because of the regulations and "reserving" requirements, they are required to hold a lot of less risky (and hence low returning) investments.

May I ask what your area of expertise is that you claim to know that position? I am a mere former IT bod, but I do have a friend who is personally responsible for the preparation of the end of year figures for a leading UK insurance company and has the health issues to go with such a responsibility. I guess he could settle the debate if he felt able to disclose such information! It is quite important to me as I have rather a large number of shares in insurance for my sins.

 

[400bhp]

Sure - am an actuary, although I don't specialise in General insurance but it's my understanding of the situation. The amount of investment return will of course depend upon the market and will also depend upon the amount of "free assets" (how much extra assets over and above how much it needs to hold to cover it's reserving requirements) an insurance company has. The more free assets the more freedom it has to pursue investment returns.

Asset return is one source of profit but not all.

@srw can answer it much better than I can.

 

[ASC1951]

Well I think we shall just have to agree to disagree.

Oh alright - but if everyone took that attitude, what on earth would happen to C&D? "400 parts per million" is already at 92 pages, with several contributors on continuous loop....

 

[ASC1951]

.... It is quite important to me as I have rather a large number of shares in insurance for my sins.

Not Royal Sun Alliance, I hope? My tiny tiny chunk of that company is showing a 3.19% annualised gain since 2003 and that is with dividends reinvested. So there is one insurance company which isn't making "shedloads of money".

 

[swee'pea99]

I once saw an actuary defined as someone who finds the prospect of accountancy too racey...

 

[asterix]

Not Royal Sun Alliance, I hope? My tiny tiny chunk of that company is showing a 3.19% annualised gain since 2003 and that is with dividends reinvested. So there is one insurance company which isn't making "shedloads of money".

No, it's much worse than Sun Alliance as my holding is worth around 20% less than acquisition value even if the dividends are allowed for. There has been an improvement in the last 12 months though. Certainly no goldmine!

 

[ASC1951]

No, it's much worse than Sun Alliance as my holding is worth around 20% less than acquisition value even if the dividends are allowed for. ...

Ouch! If you aren't locked in (ESOP etc?) why do you still have them? There again, misplaced optimism saw me hang on to UK Coal shares from £4+ right down to almost worthless .....

 

[Archie_tect]

You are being scammed by the insurance company !
Next year they will do the same , send an over priced renewal notice out but if you go online and put your details in as if you are a new customer the quote will be cheaper , I do it every year with my house insurance from direct line .

Exactly! Though with cookies, and the way that every company retains your internet information, even returning to a website after checking the quote on line can result in the price going up.

 

[User6179]

Exactly! Though with cookies, and the way that every company retains your internet information, even returning to a website after checking the quote on line can result in the price going up.

Sometimes I will change my name and put another address to see if the quotes cheaper , not insurance but Virgin Media are bad for not passing on savings , a good idea is to put in your neighbours details if they don't have Virgin and see if the quote is cheaper than what your currently paying.

 

[asterix]

Ouch! If you aren't locked in (ESOP etc?) why do you still have them? There again, misplaced optimism saw me hang on to UK Coal shares from £4+ right down to almost worthless .....

There are no losses till you sell! Also I recently got rid of the CEO so I am inclined to give the new incumbent a chance. And you know what? He's doing ok: the shares are rated 'buy' to 'strong buy'.

Did it not occur to you that coal technology might be a little out of date? Have you sold now? Clean coal energy might become a reality one day!

 

[ASC1951]

Did it not occur to you that coal technology might be a little out of date? Have you sold now? Clean coal energy might become a reality one day!

UK Coal's mining assets were peripheral to its potential as the owner of a huge acreage of unused or underused brownfield sites spread throughout the country's industrial areas - it was effectively a commercial property company awaiting an upturn. What I hadn't expected (nor was I alone) was that just as they worked themselves free of lossmaking supply contracts, the pension liabilities would explode in their faces and shale gas would make their coal worthless.
No, I haven't sold. The mining assets have been given to the pension trustees and they have had to do a joint venture with the hedge funds to redevelop the property acreage. So it's still a commercial property company - just a much smaller one!

 

[vernon]

You are being scammed by the insurance company !
Next year they will do the same , send an over priced renewal notice out but if you go online and put your details in as if you are a new customer the quote will be cheaper , I do it every year with my house insurance from direct line .

That's where you are wrong. All notifications and transactions and quoting were done via snail mail and telephone. Furthermore I am paying less this year than I was last year. Same broker, same insurance company, same motor bike, same details.

Explain that.......

 

[screenman]

I want my insurers to make a profit each year, that way they will be there should I need them.

 

[User6179]

That's where you are wrong. All notifications and transactions and quoting were done via snail mail and telephone. Furthermore I am paying less this year than I was last year. Same broker, same insurance company, same motor bike, same details.

Explain that.......

What does it matter if it is phone or internet , unless I am misunderstanding ,you got a renewal then phoned up to lower your excess and the quote was lower which means they were overcharging you on the renewal hoping you would just pay it , standard Insurance company scam , wait till next year and see if they try it again.

 

[vernon]

What does it matter if it is phone or internet , unless I am misunderstanding ,you got a renewal then phoned up to lower your excess and the quote was lower which means they were overcharging you on the renewal hoping you would just pay it , standard Insurance company scam , wait till next year and see if they try it again.

What does it matter if it is phone or internet , unless I am misunderstanding ,you got a renewal then phoned up to lower your excess and the quote was lower which means they were overcharging you on the renewal hoping you would just pay it , standard Insurance company scam , wait till next year and see if they try it again.

You seem to have a strange grip on reality......I was surprised at the decrease, the broker was surprised at the decrease. You seem to nurse some conspiracy theory.

Go figure.