How Insurers Game Out Disaster Risk and Drop Customers

… apparently some people believe that insurers are using a flawed methodology here. If that’s true, you should be able to take your capital and stand up an insurance company in a Red State with a lot of climate ignorance, charge lower premiums and make a bundle. Any takers?


1 Like

Buffett is in the insurance business. What do his insurance businesses do?

He waits until everyone has left an area, then charges high premiums as “the insurer of last resort”.

Eventually we’ll get to the point where the only people who will be able to live in a climate risk area are those wealthy enough to “self insure” and write-off their loses



He uses a very disciplined approach to not over-competing. Others lowball to gain market share. His insurers wait them out. That does not mean any of them exit the market. He just won’t write inexpensive policies. He does give value. He is not fly by night.

That said USAA is far better than GEICO.


We’ve used Amica for over 40 years. Never had a problem with any of our claims. In fact, they’ve been outstanding.


Two or three times a year I get a letter from Amica asking that I let them quote my insurance policy. The few times I’ve asked for a quote, they were about double what I’m paying State Farm. Of course, I haven’t made a claim in over 30 years with State Farm so I’m sure I’m in the lowest risk category. Maybe Amica won’t underwrite new business and place you in the lowest risk bracket?

There was an auto insurance company that operates a storefront in Walmart that offered a $15 gift card if you let them quote your policy.

They came back with $1,500 for 6-months, State Farm was charging me $130 for the same coverage at the time. You wonder why they bother, but I guess you only need to get a few “suckers” to make it worthwhile.

About a month ago I put a State Farm app on my smartphone that tracks my driving. They gave me an immediate 10% premium reduction for installing the app.

So far, I’m getting a 100% score on everything except “acceleration & cornering”. And I’m on target to get a 28% discount on renewal.



One key element: get rid of those “intrusive, burdensome, big gummit, regs” that require legitimate claims be paid. Once relieved of the “job killing burden” of paying claims, the business would be highly profitable. Because, after all, the “JCs” are entitled to have all the money, right? That is what Jack Kemp was saying.



Amica is overpriced.

Amica is a “mutual” insurance company, which means you get a dividend at the end of the year if they have a good claims experience (i.e., don’t need to pay too many of them.)

My brother is an actuary specializing in the auto insurance business and swears by Amica. So I asked what he’s getting as a year end dividend from Amica. He said usually 20% to 25% of the annual premium paid. That was far short of the difference between Aimca’s quote and what I was paying State Farm.


USAA sends or applies money back in January.

I had an accident in 2019 that skyrocketed my insurance costs. USAA was the only reasonable insurer. Plus I got over most of the rise in USAA’s rate in three years. GEICO wanted a ten year penalty rate or cost in my insurance premiums. Amico was way over USAA’s costs.