One would think the insurance industry's actuarial staff would make prudent decisions, and if they were actuaries managed by actuaries then I would agree with you. Rates would fall with the drastic reduction of the adverse selection problem.
However with almost two decades in the insurance industry I can assure you that's just not the reality we live in.
In our reality its not the people with the proper technical skills (underwriters and claims adjusters) directing the company but lawyers, accountants, and marketing shmos, the people who should never run anything but legal teams, accounting teams, and marketing/advertising. An argument can be made that most companies in North America, and increasingly in the EU/Australia/New Zealand are that way, but that's entirely another can of worms.
Since I'm typing this during a commercial in the Gators game I'll skip the details and nail the punchline.
With marketing/legal/HR/and accounting weenies running insurance companies, there can never be a correction in rates. They will always find ways to further line their pockets or remodel insurance carriers as they think one should run not as was proven over a couple centuries since the first insurance company was founded in a Liverpool tavern.
Here in FL, because the L/A/M weenies are running the actuarial departments, instead of relying on proper actuarial tables established over decades of experience, they've all moved to saving a few bucks by using computer models offered by a small number of companies operating without adequate actuarial staff. So IT guys end up getting into the vacuum in the decision loop, and as much as I respect you Toivo and many IT folks, to be blunt y'all don't know fuck all about being an actuary, underwriter, or claims adjuster. Vice versa also applies to us as you well know.
So sayeth the man who can't even replace a hard disk drive by himself, even with written instructions complete with plenty of illustrations and pictures!
no subject
However with almost two decades in the insurance industry I can assure you that's just not the reality we live in.
In our reality its not the people with the proper technical skills (underwriters and claims adjusters) directing the company but lawyers, accountants, and marketing shmos, the people who should never run anything but legal teams, accounting teams, and marketing/advertising. An argument can be made that most companies in North America, and increasingly in the EU/Australia/New Zealand are that way, but that's entirely another can of worms.
Since I'm typing this during a commercial in the Gators game I'll skip the details and nail the punchline.
With marketing/legal/HR/and accounting weenies running insurance companies, there can never be a correction in rates. They will always find ways to further line their pockets or remodel insurance carriers as they think one should run not as was proven over a couple centuries since the first insurance company was founded in a Liverpool tavern.
Here in FL, because the L/A/M weenies are running the actuarial departments, instead of relying on proper actuarial tables established over decades of experience, they've all moved to saving a few bucks by using computer models offered by a small number of companies operating without adequate actuarial staff. So IT guys end up getting into the vacuum in the decision loop, and as much as I respect you Toivo and many IT folks, to be blunt y'all don't know fuck all about being an actuary, underwriter, or claims adjuster. Vice versa also applies to us as you well know.
So sayeth the man who can't even replace a hard disk drive by himself, even with written instructions complete with plenty of illustrations and pictures!