Narrowly escaped a flood at our place yesterday. Most rain in one hour I had ever seen yesterday morning. I was out in the middle of it unblocking gutters in the spouting and clearing drains on our deck. I got absolutely saturated. These so called one in one hundred year events seems to be happening every few weeks. Who'd own an insurance company with every increasingly wild weather caused by climate change
Its a fair point but also remember premium rises come into the equation. In 3 years my home and contents premiums are up 23% and my commercial car cover just went up 9% this week.
A broader issue will become people under insuring as they try to save money on cover as all the inflation/cost of living issues drag on.
No doubt a lot of vehicle damage claims from yesterday too ... quite a few cars in my work carpark filled up with water (I narrowly escaped before mine breached!).
Don't know much about cars but I did read that after a flood most cars that get submerged tend to get written off because of water in the electrics and brakes and airbags are expensive to fix. No doubt all part of Towers risk assessment
At the top of every bubble, everyone is convinced it's not yet a bubble.
Narrowly escaped a flood at our place yesterday. Most rain in one hour I had ever seen yesterday morning. I was out in the middle of it unblocking gutters in the spouting and clearing drains on our deck. I got absolutely saturated. These so called one in one hundred year events seems to be happening every few weeks. Who'd own an insurance company with every increasingly wild weather caused by climate change
Because every story like this reminds people that insurance on what is often their most valuable asset is essential service because they can't take the risk of loss that insurance avoids. The vast majority of people will cut other costs before they risk going uninsured on their house/contents. Its a good business to be in where customers prioritise the product the sector is selling.
Yes some risk probabilities are changing so your statement is better phrased as "who'd own a dumb insurance company that assumes insurance claim rates will return to historical levels despite increasingly wild weather caused by climate change" and the answer to that is only a fool because that business model is problematic. A smart insurance company is however a different proposition because they are correctly pricing the level of current (1yr forward) risk into their premiums and making a profit at the premium that is set. Tower's share price indicates the jury is still out on whether they fall into the smart or dumb category, but some past decisions and the current share price is leaning towards the dumb category. If the market starts to swing towards the smart category then there's some really strong share price gains to be made. Tower have made a lot of system and process changes over the last 5+ years meaning there is a distinct chance they are transitioning from the dumb to smart category. What the market needs for a re-rate is delivery of results, not just missed profit targets.
Because every story like this reminds people that insurance on what is often their most valuable asset is essential service because they can't take the risk of loss that insurance avoids. The vast majority of people will cut other costs before they risk going uninsured on their house/contents. Its a good business to be in where customers prioritise the product the sector is selling.
Yes some risk probabilities are changing so your statement is better phrased as "who'd own a dumb insurance company that assumes insurance claim rates will return to historical levels despite increasingly wild weather caused by climate change" and the answer to that is only a fool because that business model is problematic. A smart insurance company is however a different proposition because they are correctly pricing the level of current (1yr forward) risk into their premiums and making a profit at the premium that is set. Tower's share price indicates the jury is still out on whether they fall into the smart or dumb category, but some past decisions and the current share price is leaning towards the dumb category. If the market starts to swing towards the smart category then there's some really strong share price gains to be made. Tower have made a lot of system and process changes over the last 5+ years meaning there is a distinct chance they are transitioning from the dumb to smart category. What the market needs for a re-rate is delivery of results, not just missed profit targets.
Well said. I guess the risk is that in the process of trying to reprice and actuate policy pricing strategies that more correctly reflect the risks you're going to lose some customers along the way. I'm a good case in point as the annual renewal of my car came in at 25% more this year than last, despite the 107 day lockdown in Auckland meaning I drove considerably less distance than normal. This is on top of a 15% price increase the previous year which was also a year in which many drivers were on the road a lot less.
I quizzed them about the size of the increases in the circumstances and got a carefully curated long winded response that had obviously been well put together and cut and pasted from previous communications. It went on and on about sharing the risk from a community based perspective and was clearly designed to get an emotional response that yeah, being part of the community involves sharing risk with the community. This all read very well and was more than a little soothing BUT It ended by saying I could save $XYZ (about 12% from memory) by eliminating cover on my vehicle for any driver under 25 years old.
All this did was further annoy me because it made me realise that they had never explained this option to me before and as I have never allowed anyone under 25 to drive any vehicle I have owned in more than a decade since the kids left home I have been overpaying for many years, all through a lack of proper disclosure of this option on their part.
The combined effect of egregious systemic price increases at a time when people are driving a lot less and their lack of disclosure means I am self insuring my car now. I won't self insure my house though
Last edited by Beagle; 24-03-2022 at 09:47 AM.
Ecclesiastes 11:2: Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
AMI actually asked if we would be having any under 25 drivers use our two primary vehicles when our son insured a car in his name. Saved us money and kept them a very happy customer.
Narrowly escaped a flood at our place yesterday. Most rain in one hour I had ever seen yesterday morning. I was out in the middle of it unblocking gutters in the spouting and clearing drains on our deck. I got absolutely saturated. These so called one in one hundred year events seems to be happening every few weeks. Who'd own an insurance company with every increasingly wild weather caused by climate change
Irony is insurors now lament the consequences of climate change when for the last century insurance companies were the biggest investors in oil and mining exploration ..great returns on zillions of premium money.
At the top of every bubble, everyone is convinced it's not yet a bubble.
Irony is insurors now lament the consequences of climate change when for the last century insurance companies were the biggest investors in oil and mining exploration …..great returns on zillions of premium money.
I have told you before Winner that this is not relevant to Tower Insurance which invests only in bonds and mostly government bonds at that.
Some very smart work by the ACC trading desk if you check the latest SPH Notice filed today, updating the previous effective 15/04/2021 - In the intervening 12 months ACC acquired more than 8m shares and sold more than 7m shares with a net acquisition of a further 948,789 TWR shares at a total cost of just under 40c per share if my division is correct. Stake now exceeds 9% of shares on issue.
I have always regarded these folk as pretty savvy, so a good sign in my view.
but we didn't get that much rain atp.Strong winds for a while.Feel for homes and business's who got flooded.
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Originally Posted by Beagle
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