What % of Auto Premium Goes to Payouts?

Auto_man12

New Member
3
Are there any auto insurance agents or industry professionals who know what percentage of Auto insurance premiums collected actually goes to pay out claims? Ive heard conflicting numbers, with some even saying payouts are higher than premium intake, and that insurance companies make money off investments from the cash hoard. If this were the case, why would they just not continue to make money off the cash hoard and stop writing policies, essentially becoming an investment company.

I suspect the payouts are no more than 50% of premiums, just so they can cover advertising, employee salaries/benefits, fraud and have some profits left over.

Anyone know for sure?
 
Loss ratio should not exceed 100%, though it might happen.
Combined ratios may exceed 100% which is where the investment income comes into play.

Read an insurance companies annual report. They usually give these numbers, though it might take a bit of noodling to get the actual loss ratio number.

Most insurance companies pay out in excess of 50% in losses.

You can get a good snapshot overview at:
How Berkshire Hathaway's GEICO Crushes Allstate and Progressive (ALL, BRK-A, BRK-B, PGR)

Dan
 
Thanks Dan!

Do you know the answer to these questions:

Around what is the average payout per claim?

What is the average claim per certain number of customers?

How many claims does one claims adjuster typically handle?
 
Thanks Dan!

Do you know the answer to these questions:

Around what is the average payout per claim?

What is the average claim per certain number of customers?

How many claims does one claims adjuster typically handle?

why are you writing an article on insurance? cant do your own homework?:SLEEP:
 
These questions are not easily found by research, whereas an insurance expert would know them right away.
 
Again, I encourage you to read some annual reports, some of this is in there, at least to the point you can infer some answers.

I don't know the answers to these questions, doesn't really matter to me. Never bothered to do the research on them, though I've seen the 'average' claim number a few times along with the average interval between claims, but don't remember either one.

How is any of this relevant to anything?
 
It would _highly_ unusual for a Loss Ratio to be as low as 50%. Usually they run anywhere from 80% up to 110%. Anything over 110% and the company is probably loosing money. Each company is difference so there is no one answer. This is why some carriers do better then others. It's also dependent on what type of market they are in.

What you need to look at the the Combined Loss Ratio which is the losses plus expenses vs premiums. It's this that is usually between 80% and 110%.

Carriers don't just invest the their money as most can show a CLR under 110%.
 
Back
Top