It may not do any good, but if you are being framed, you hold your head high and shout it to whoever might listen. You don’t encourage actions that justify the use of even more firing squads. (”See when we put them before a firing squad, they admit they don’t really need those increases!”).

The point is that you try to diminish the importance of timely rate increases as being perhaps “actuarially justified”, as if that were a minor point. Do the very simple math (2 to 5% profit margins, 40% increases) – deferring such increases do not just mean the company must settle for a little less exhorbitant profit. Doing so starts those blocks down a path of enormous losses, and multiplied across the country, financial instability.

If we are really beyond trying to “get them to understand”, then we may as well just shoot ourselves. In all likelihood it’s not that they can’t understand, it is that they don’t want to because that does not fit with their ultimate goals.

I am not an apoligist for these companies. I don’t see anybody doing a very good job explaining and communicating real solutions. Some companies may not like my solutions either. But at least mine are actual attempts at solutions. There are “actuarially justified” solutions to 40% increases if anybody really wants to hear them.

Chuck

Do I understand what putting it off would do? Yes I do. But the point is that no matter how justified those increases might be actuarially they just give ammunition to those who want to blame the insurance business for the mess we’re in. The industry doesn’t exist in a vacuum. It simply can’t afford to play ostrich by continuing to insist how justified such increases are when the political consequences are so great.

When someone is saying they’ll put you in front of a firing squad, you don’t go and get the gun for them and offer to fill it with ammunition.

Steve

When was the last rate increase on this block and how much was that increase?

You may think it is a good idea to defer, given the current political environment, but for how long? 39% is not a good idea, but wait another year and it may need to be 60% or 80%. How do you think that increase would be received?

Do you understand the differences that will occur in the experience of a block of business if you increase rates one time by 80% over four years compared to, say, 20% per year each year? While politically expedient to defer, the delay will do substantial harm to insureds (hint: think anti-selection shock).

Dismiss the actuaries and their numbers if you want, but it would be refreshing if one or two could have a seat at the debate table. We’ve got politicians, lawyers, doctors, and pundits all putting their 2 cents in about how insurance should work, but when was the last time you saw an expert in insurance being interviewed on any of the news networks?

The 39% rate increase is a problem, but none of the pols and pundits really understands why these increases occur and, as a result, virtually everything being proposed to fix things is just going to make the problems worse. There are definitely needed insurance regulatory reforms that can help improve things, but until we deal with the cost of health CARE, we are (somewhat ironically) dealing only with the symptoms and not the disease.

Now, bring on the defenders of the Constitution and charges of “hating our freedoms.”