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Is the world becoming uninsurable?

(charleshughsmith.substack.com)
478 points spking | 6 comments | 17 Jan 25 00:32 UTC | HN request time: 0s | source | bottom
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purplezooey ◴[17 Jan 25 03:51 UTC] No.42733888[source]▶
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.
replies(2): >>42734182 #>>42743067 #
itake ◴[17 Jan 25 04:45 UTC] No.42734182[source]▶
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?

replies(1): >>42734503 #
system7rocks ◴[17 Jan 25 05:55 UTC] No.42734503[source]▶
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).

replies(1): >>42734523 #
1. itake ◴[17 Jan 25 06:00 UTC] No.42734523[source]▶
> 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.

replies(1): >>42735632 #
2. Snoddas ◴[17 Jan 25 09:23 UTC] No.42735632[source]▶
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.
replies(2): >>42735883 #>>42735983 #
3. EraYaN ◴[17 Jan 25 10:02 UTC] No.42735883[source]▶
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.
4. itake ◴[17 Jan 25 10:17 UTC] No.42735983[source]▶
State Farm’s revenue was $104.2 billion for 2023. His payment was 0.02% of the revenue. That’s basically a rounding error.
replies(1): >>42742699 #
5. tmnvix ◴[17 Jan 25 20:07 UTC] No.42742699{3}[source]▶
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.
replies(1): >>42744935 #
6. itake ◴[18 Jan 25 01:25 UTC] No.42744935{4}[source]▶
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.