For the other 12 years they were over. 60% of the years were losses.

The average is 101.535 for all years in your source. So over 20 years their costs were $101.53 for every $100 in premiums collected.

I didn't say that they ALWAYS post losses, I said that it is very common, and that insurance premiums are a net money loser for the industry.

This is just another source proving that out, unless I'm missing something?

>Selling insurance and paying claims is a sort of loss leader for the insurance industry.

Now you say

> I didn't say that they ALWAYS post losses

And

> that insurance premiums are a net money loser for the industry.

This is circular. As for the article, it shows the context that the last couple years have been exceptional and core operations aren't sustainable.

Your reasoning doesn't explain why these companies are cutting coverage, skyrocketing premiums, and leaving markets. They wouldn't be retrenching if the status quo was absorbing losses.

> In 2023, insurers lost money on homeowners coverage in 18 states, more than a third of the country, according to a New York Times analysis of newly available financial data. That’s up from 12 states five years ago, and eight states in 2013. The result is that insurance companies are raising premiums by as much as 50% or more, cutting back on coverage or leaving entire states altogether. Nationally, over the last decade, insurers paid out more in claims than they received in premiums, according to the ratings firm Moody’s, and those losses are increasing. [0]

[0] https://www.wlrn.org/business/2024-05-27/as-insurers-around-...

Insurance companies are indeed leaving certain markets and raising premiums dramatically, but this is happening because:

1. Climate Change Risk Unpredictability

* Traditional insurance models rely on being able to predict risk with reasonable accuracy

* Climate change is making weather-related disasters more frequent and severe

* Historical data becomes less reliable for predicting future losses

* This uncertainty makes it impossible to price policies appropriately

2. Regulatory Constraints

* State regulators often limit how much insurers can charge for coverage

* Companies can't price premiums high enough to cover increasing risks

* They're forced to choose between unsustainable losses or market exit

* Political pressure often prevents charging actuarially sound rates

3. Concentration of Risk

* Some areas face multiple overlapping risks (fire, flood, hurricane)

* Large-scale disasters can trigger many claims simultaneously

* This violates the insurance principle of risk diversification

* Even investment returns can't offset such concentrated losses

4. Scale of Potential Losses

* Traditional model accepts small predictable underwriting losses

* Current climate risks create potential for catastrophic losses

* Example: California wildfires can destroy entire communities at once

* No amount of investment income can offset such massive losses

5. Market Structure Issues

* Some markets require insurers to take all risks (can't be selective)

* Cross-subsidization between markets becoming unsustainable

* State-specific regulations creating fragmented markets

* Limited ability to diversify within regulated markets

While the traditional insurance model can handle planned small underwriting losses offset by investment gains, that model breaks down when facing large-scale unpredictable risks that can't be properly priced or diversified. This explains why insurers are withdrawing from certain markets while still operating profitably in others.

I've yet to see a capital markets discussion with an InsuranceCo where someone says, "Oh! Your combined ratio under normal conditions is at/over 100%. Good job management team!" Please provide some sources supporting combined ratios >= 100% as OK/sustainable, or this will continue to be circular.

> Insurance companies are indeed leaving certain markets and raising premiums dramatically, but this is happening because...

Dude, your #1-5 just listed reasons why the core insurance operations have to be profitable, or they cease operations. That's making my point. You made no reference to their investing activities overcoming losses as you implied. If they can't price risk effectively in their core business "under normal conditions," then they will get competed out of the market.

Dude, your source shows that over a multi-decade time-span the industry loses underwriting money more often than it makes money (12/20 years), and if you tally it out in the long run, they are net negative (101.5 dollars paid per 100 in premium income). https://www.spglobal.com/marketintelligence/en/news-insights...

Of course they aren't going to congratulate themselves on losing money on underwriting in those words. The way you will see it phrased is congratulating themselves on increased premium income from sales, while elsewhere in the report acknowledging underwriting losses. Maintaining the same rate of underwriting loss while increasing sales will also increase the total loss, but it is not at all rare to see an investor report congratulating management on increased sales in a circumstance where a larger loss was made.

> Dude, your #1-5 just listed reasons why the core insurance operations have to be profitable, or they cease operations. That's making my point. You made no reference to their investing activities overcoming losses as you implied. If they can't price risk effectively in their core business "under normal conditions," then they will get competed out of the market.

You asked me to address those specific circumstances, which I noted are largely separated from the aggregate of all circumstances and markets that drive the insurance industry as a whole. You are missing my big point; the insurance industry do not get rich by charging you premiums higher than your claims. Any profits they make are slim, and normally eaten up by losses in the long term (again, see your own source). The insurance operations don't have to be profitable, and they aren't according to both your source and me.

They have to be predictable so that you can price your premiums in a way that the underwriting losses aren't greater than your investment income. Those reasons I listed are what make those policies unpredictable, un-priceable effectively, and therefore not an acceptable way to lose money.

I didn't address the fact that they make their losses back in investments because it was the whole point of my original post, and all of the sourcing that I have done; it is broadly made in the quarterly reports I linked to, as well as the letters to investors from Warren Buffet.

Per your own source and decades of investor documents, the industry posts underwriting losses constantly, and makes their profits by investing the float. It isn't a big secret.