Is the world becoming uninsurable?

It’s hard to view insurance as a viable business when overpaying executives has become the norm. Take State Farm, for instance: its CEO was awarded $50 million in compensation over just two years — 2022 and 2023. The industry is rife with waste and high barriers to entry.

Lets pretend the CEO made $0 over 2 years and that $50m goes to what?

- $350 annual bonus to the 67,000 employees?

- Lower the cost of the 91 million policies by $0.27 per year each?

- Cover an additional 50 homes in California?

Where should it go?

They bank it as any insurance company should do. Invest it cautiously. Hire sound decent people to run it with solid levels of accountability (including from a board of directors that is mostly made up of a rotating number of clients). Do it from the beginning of the company. Grow your staff slowly. Build enough of a cushion that can last the company years. Right? Right?

I'd run that company well for $250k/annually + benefits (an enormous amount of money).

> They bank it as any insurance company should do. Invest it cautiously.

I hope they aren't investing that capital. AFAIK, insurance capital needs to be liquid, for it to be ready for a payout.

You still didn't address my point is that $25m/yr is a drop in the ocean. "investing $25m properly" will have zero impact on the business.

It will have atleast be > than zero, and doing it every year instead of giving it away to some overpriced CEO will it will accumulate.

I don't think you quite get how little money it is for these types of operations, 25m is essentially missing 2-3 zeros before it becomes anywhere near usable and even worth it to bother.

State Farm’s revenue was $104.2 billion for 2023. His payment was 0.02% of the revenue. That’s basically a rounding error.

Wouldn't it make more sense to compare it to profit rather than revenue? They suffered a $6.3 billion dollar net loss in 2023.

> Take State Farm, for instance: its CEO was awarded $50 million in compensation over just two years — 2022 and 2023.

Honestly, no one would care about CEO pay if the insurance companies would just pay out and make customers whole. Instead, there are mechanisms and processes in place to keep premiums coming in and to reduce or refuse claim payouts.

I don’t know. Profit (mostly?) matters to investors and the company’s substantially.

His pay was 0.39% of the loss. Still a drop in the ocean imho.

Should he have been paid less ? Or more? I don’t know.

But what I do know is when people get upset at stock buybacks or CEO pay, the act like if the company didn’t do these things the company would be drastically different.