If you pay at home thinking about the mounting stack of bills, it is easy to see the big picture to lose. The fact is that, just like you in a new world of’re wrong, there are other bad guys as well. In this case, the people, inventors in the insurance industry. They bought shares in these large companies where prices were high’m not because the world suddenly safe. Although it is a mutual insurance company, State Farm, we take as an example of what happens in the industry. This is one of the largest insurers in the U.S. and it’s just an operating loss of $ 542 million for 2008. His net worth has declined by 16% only. Now you have this society is not made mortgage crisis to understand. There was no such securitized “or derivative thats. This company is made only in the general collapse in stock prices.
To understand, we must, as insurance companies looking for work. They demand the most insured with a car or a house, a monthly premium. This results in a small mountain of money each month. The money will be invested until needed to pay claims. Some goes into fixed income products. The rest is in shares. As you may have noticed, Dow and other stock indexes are falling. The result is that State Farm is the net present value of lost investments, and in many cases, receive more income than the interest or dividends. That would have outside of this little thing called global warming, which nobody believes, controllable events, hurricanes and weather disasters. The last two years have seen a sharp increase in requests for damages weather. Put together the loss of investment income and an unexpected rise in claims, and you make a profit by 2007 to $ 5,460,000,000 loss in 2008.
If you are concerned? Well, it looks like. The insurance sector is a sudden loss. The shareholders in general and insured, State Farm are not happy. Senior officials of companies want their bonuses. The profit businesses seeking to increase premiums in all sectors to recover their profits in the dark. Apart from a likely recession, a depression again, this is not working. Create policies and people buy more prizes. fair to their farms auto insurance rates in Georgia has decreased by an average of 1.5%. For the record, which means that the current premium of 12% less than five years ago. Since State Farm is responsible for about one quarter of all vehicles on the roads of Georgia, is a good deal. So the next time around you shopping for cheap car insurance, you might be pleasantly surprised that prices have an increasing number of insurers has declined in other countries. The next bill is not as painful as you fear.