Interesting article on how the reinsurance industry moves in lockstep and all players are significantly raising premiums. With the recent price hikes in Florida, BRK is now the largest underwriter of Florida’s state-run insurer, Citizens Property Insurance Corporation after it cut a deal for $1 Billion in coverage.
A few years ago Buffett’s GenRe said it was not aggressively pursuing business until “prices strengthened”, apparently meaning the competition for marketshare had made prices unreasonable. They were still doing business, just not bad business.
Perhaps the others have learned the lesson, perhaps not. But this is not a surprise.
Warren Buffett said that Berkshire Hathaway’s exposure to Hurricane Sandy was “manageable”. The company had written about $1.1 billion in property and casualty insurance in the areas affected by the storm, but Buffett said that Berkshire had taken steps to mitigate its losses, such as charging higher premiums and excluding flood coverage from policies.
In an interview with CNBC, Buffett said, “We’re not going to get killed by Sandy.” He added that Berkshire had “a lot of experience with hurricanes” and that the company was “well-positioned” to handle the losses.
Ultimately, Berkshire’s losses from Hurricane Sandy were about $1.1 billion, which was in line with Buffett’s expectations. The company was able to cover its losses without raising its premiums or cutting its dividends.
They may be referring to the dividends sometimes paid to insurance policy holders if the claims experience is much better than expected. For example, State Farm paid me a dividend on my auto insurance during COVID since people were driving less and causing fewer accidents.
And of course, Obamacare requires insurers to skim off no more than 20% of health insurance premiums collected. During COVID, so many people were avoiding doctor’s offices and hospitals that claims went way down.
I paid $1.43/month for health insurance in 2019 and 2020, less than $40 total. My Obamacare dividend was $636.12 for those 2 years. My proudest US health insurance moment.