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From: dee@cca.UUCP (Donald Eastlake)
Newsgroups: net.misc
Subject: Re: Insurance Industry
Message-ID: <7405@cca.UUCP>
Date: Mon, 21-Apr-86 09:04:21 EST
Article-I.D.: cca.7405
Posted: Mon Apr 21 09:04:21 1986
Date-Received: Wed, 23-Apr-86 21:35:51 EST
References: <5981@allegra.UUCP> <>
Reply-To: dee@cca.UUCP (Donald Eastlake)
Organization: Computer Corp. of America, Cambridge
Lines: 46

In article <> robertv@tekla.UUCP (Robert Vetter) writes:
>In article <5981@allegra.UUCP> dsf@allegra.UUCP (David Fox) writes:
>>I've been hearing some bad stuff about the insurance industry recently.
>>For example, 60% of all daycare centers had their rates go up 300 - 400%,
>>despite the fact that 90% never collect on their policies and the
>>largest claim last year was $15,000.  The industry claims that rates
>>are going up due to the proliferation of lawsuits and large awards, but
>>others claim that even if you add all the awards together you get an
>>amount which is insignificant to the industry.  
>
>
>	As long as:
>		1) Carrying of certain types of insurance is required
>			by law.
>		2) Regulation of rates is almost non-existant.
	In Massachusetts, rates for legally required insurance seem to be
reasonably regulated.
>		3) Insurance companies can raise rates from a
>			few well publicized events (beyond actual
>			requirements).
>	we will be required to to pay through the nose.
>
	Sorry, you would need to meet another condition, some strong entry
barrier into the insurance industry.  True, you do have to have enough
assets to become an insurance company, but then what good is one that will go
bankrupt the first time there is a big claim?
	Day care centers can get together and form an insurance cooperative,
get insurance overseas if all US insurance companies are pricing above the
market (or sue for triple damages if this is due to a conspriacy), etc.
>
>	I understand that current rate hikes across the board are
>	based on who can pay and the fact that poor investments
>	were made by the insurance companies in a depressed economy.
>
	Insurance companies tend to invest conservatively in such things as
real estate or high quality bonds.  It is reasonable that market conditions
could negatively effect many such investments at the same time.  As a result
many insurance companies would increase rates a bit.
	Overall, I think a relatively free market in insurance, tempered
by government anti-trust and limited intervention in certain areas is
better than the nationalization of insurance or total government regulation
of rates or the like.

-- 
	+1 617-492-8860		Donald E. Eastlake, III
	ARPA:  dee@CCA-UNIX	usenet:	{decvax,linus}!cca!dee