Originally Posted by Eurostyle
The insurance industy is doing very well...They are for sure not loosing any $$$...with the billions of profit they make
not entirely true... the money collected from insurance isnt just to cover the accidents and so fourth.. if alot of accidents happen the bank will loose money...
at many RBC Dominion Securities branches they have traders there that invest in capitol markets.
let me explain what actually goes on...
1,000 guys want insurance they go to company Y and company Y says each one of you can get insurance for 5,000 each.
company X sees this and markets there insurance for 4,500 each. so the 1,000 guys go there.
lets just say that the 1,000 people went to company y and signed insurance.
and 100 of them got into a serious accident.. that extra 500 dollars there is for the company to be safe and wont take such a heavy loss in insurance provided.
same situation but the 1000 went to company X and signed and 100 of them went into a serious accident.. company X is SCREWED!!!..
but what company X does is take a chunk of that 4500 and invests it in the stock market and they get EXPONENTIAL returns..
not only can they cover the costs of the accident but they made a nice little return.
not only that.. other customers looking for insurance sees that company X offers lower rates then company Y so even THEY get more buisness.
its all great for company X lower rates, more customers. and if none of them got into any accidents then company X makes HUGE bucks.
now how does this all tie into higher rates???
company X cant make jack squat into todays markets... just loosing money left right and center. to cover the costs they are going to increase the rates...
the banking system is one ****ed up organism..