Date:         Thu, 28 Sep 1995 16:36:00 -0700 (PDT)
Sender:       Vanagon Mailing List <vanagon@vanagon.com>
From:         "Maher, Steve (SD-MS)" <SMAHER@PO2.GI.COM>
Subject:      Re: Insurance Industry Regulation (L)



>In California the Insurance Commisioner is supposed to handle regulation
>of Ins. Co. profits.  They are, I am told, allowed to set their rates to
>guarantee a 15% profit margin.  This is the only industry that I know of
>that is guaranteed a profit margin.

Really? If I start up Maher Insurance, and register with the Commissioner
or whoever, then I am GUARANTEED to profit, even tho I know zip about
insurance and will probably screw up the company royally?  If I set my
rates so high that I make up for my unworkable business practices, how
will I get customers to pay them? I rather think they'll all skedaddle
over to State Farm, and my profits would be zero. Negative if you
include startup costs.

Insurance Co's aren't guaranteed a profit. Just the opposite-- their
profits are _restricted_ to a maximum of 15%... but no minimum!
I'm not sure I'd personally want to start up a business (even one I
was good at) if some govt agency was clamping a profit restriction
on me.

I have a hunch (again, no proof-- bummer) these restrictions came about
because the public perceived collusion and price-fixing among insurance
companies. I doubt they ever saw proof (again, if this were true, then
proof would be real hard to come by of course). If these collusion/
corruption rumors are true, then the industry needs more than restriction.
It needs the Spanish Inquisition, and deserves it. But if they're not
true, then we have visited terrible abuses on a legit, vital business,
and hurt our own selves pretty badly in the process. I wonder how hard
"we the people" checked into this, before simply lowering the boom on
the "evil" insurance companies?



>It is also the largest legal
>gambling system in the world.  They bet you won't (Die, Crash, Injure
>someone on your property, have your car stolen etc..) and you bet you
>will!

Exactly correct. Always has been, always will be. And should be! How else
could it work?

Insurance is pure gambling. Most other legit companies are too, to a
lesser extent. VW gambles that they can produce good enough cars that
you will buy theirs instead of Ford's or BMW's. If they can't, they
wither and die, unless they change their ways. Have you driven a Yugo
lately?


It keeps coming back to the same question. We need certain info to tell
if the insurance companies are abusing us... or if we are abusing them
instead. To my knowledge, nobody's even checked. I hope I'm wrong, and
that we can find out for sure. Anyone know of any leads on this info?