Thursday, 7 February 2013

Love insurance

News that Rowan Atkinson has been paid a £910,000 insurance claim on a car he crashed last year sounds expensive.  But Mr Bean's payout is small beer compared to the massive hits the insurance industry routinely reports. In 2011 the industry told us that as a whole they incurred $107bn (£67bn) in claims – the costliest year for catastrophes ever.


This year will be less expensive, despite superstorm Sandy in the US and the Costa Concordia disaster off the Italian coast. Surprisingly the insurance industry only alerts us to their bad news, continuously reinforcing the message that we should be insured.

If you look hard, hidden away in the steady drip of bad news is the truth, which is that insurance is a licence to print money.





The biggest insurer of them all is a company called AIG.  This monster got into terminal financial trouble by insuring Credit Derivative Transaction and Mortgage backed Securities in the credit boom and was one of the main reason for the huge Credit boom and bust leading to the credit crunch.  In the background whilst Lehman Bros was failing the US government had to step in and save AIG with a $182 billion bail-out.  However in just three years AIG has turned itself into a leaner, simpler business making staggering profits for the US government share purchasing scheme and other shareholders.  In what other industry could you go from a $180bn black hole to $15bn profit in 4 years.  The economist has more at -

http://www.economist.com/news/finance-and-economics/21571139-insurer-has-done-good-job-rehabilitating-itself-can-it-stand-its-own

Just in case you are wondering you are probably over insured!!

Subscribe Now: Feed Icon