NOt a broad brush statement at all.. You haven't had claims, but others certainly have.. and chances are that the claims are way above their premium..
Asmall BI claim is in the range of $30,000.. and can go to 6 figures easily.. That is the issue.. No one has a crystal ball..wish I did..
This is a report I found http://www.insurancejournal.com/news/na ... 218878.htm
for auto physical damage only.. there is more to the picture than that, of course.. Notdefending one way or the other... but to not carry insurance makes no sense to me.. and I feel that a position contrary is simply uninformed..
Thanks for the link, I appreciate it.
having said that, I'm still very sceptical. The figures in the table are extremely ambiguous. Expressing the figures for sales ("direct premiums written") as a monetary value, then expressing the outgoings ("direct incurred loss") as a percentage, isn't apples to apples.
When I did my business courses, if your income equals your outgoings, that's break-even. Not until you outgoings exceed your income are you in a loss situation. Simplistic, yes, but true.
What I read from the table in the article you linked to, is that in the worst case figures taken, that of State Farm for the second quarter of 2011, 86.33% of income was redistributed as "loss", leaving 13.67% as "profit". Now obviously this ignores overhead, etc.
But this is the worse case cited. Best case reported was 44.48% (or 55.52% profit), and and even for the same time period as the worst of all, the best in that quarter was 50.01% (or 49.99% profit).
So even with a 30% overhead cost, very few of these companies were ever making an actual loss for these the three year period (using the figures mentioned)...even the worst performer is only at a 2.85% loss. If they run with 25% overhead, they all are in profit.
Taking another tack, for 2009 the US bureau of transportation statistics reports 254,212,610 registered motor vehicles, and the Census bureau reports 10.8 Million vehicle accidents. So extrapolating from this, the accident rate is 4.2%. Now figures that I could find online stated average insurance policy rates for 2009 are $1,796, which, with the accident rate and assuming a $30,000 cost to each claim, leaves insurance companies taking in $132,565,847,560 more than they pay out.
132.5 Billion dollars more coming in than going out is the sort of "loss" rate many industries would be content with!
I realize that this is pure conjecture.......but no more than what's being cited for the opposing viewpoint. Figures showing amounts coming in, versus amounts going out, will truly tell the real story.