Value Collector
Have courage, and be kind.
- Joined
- 13 January 2014
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If the insurance business is on such a knife edge , I wonder if it's a good idea that people rely on corporate entities to provide it, when they could go bust if faced with extraordinary circumstances. Better to have the governments doing it I'd say.
The insurance claims are backed by the float, and then the insurance company has its shareholders capital at stake, and then the insurance companies are generally insured by a reinsurance company, so there are multiple layers of capital backing policies, as long as policies are sold at the correct price, and courts don't force insurance companies into paying settlements on things that weren't covered in the contract, things should be fine.
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Here is warren talking about how low interest rates are forcing the cost of insurance premiums up, because most companies can not earn as much on their float any more, especially in Europe where there are negative interest rates.