@bible_mum Maybe all of the insurance fraud as of late re: arson? Coupled with home values also being up a silly amount which makes everything more expensive come repairs.
Nobody should be happy with high home prices because these are the outcomes.
@karleyanahid Markets dropped historically last year. Both bond and equity markets ended the year down. Only second time that’s ever happened in history.
@resjudicata Yeah I know but that shouldn't mean overly too much for an insurance fund compared with the massive increase in rates, At least for pension funds who also heavily invest in bonds it was a boon because it meant they could match their future liabilities much easier. Of course with pensions I guess the liabilities are less predictable so they may not be able to hold maturity. They are paper losses after all and unless forced to liquidate institution should be fine. That was the problem with the banks That failed is they were forced to liquidate.
@karleyanahid So right now a lot of Canadian insurers are paying more in claims than the premiums they bring in.
If you’re familiar with reinsurance, I can tell you that every single Canadian insurer has exhausted the first cat. tower of their reinsurance coverage. It’s a blood bath in the insurance market right now. Expect premiums to rise sharply.
@nayelly I'll grant you that I am much less familiar with the insurance business compared to banking or pension funds. I figured they would be like pension funds since they are another one of the primary institutions that holds bonds, in that the new higher rates will make it much easier to match future liabilities. Therefore while they did take a hit in one year they'll be able to match their liabilities better with my thought process, of course with insurance I guess you could be forced to liquidate much quicker and take losses due to the unpredictable nature.
Insurance companies definitely don't just take a fee and hold the money The investment returns are essential to how much they charge to insure various risks.
@miguelp Yeah I know that's what I'm talking about, But for something like insurance companies or pension funds it's fine that the bonds took a hit because they took a hit due to the rates rising so much on them. If you're a pension fund or an insurance company taking money in and buying bonds to pay out a disaster in the future (your liability) It should be a good thing that bond prices went down due to higher rates, n pension funds took a similar hit but it was a good thing long term. Now I could see insurance companies posting losses relative to their premiums this year but that's a poor excuse when it means that they can cover future liabilities with a lot less capital now.
@donaciemento How often are you doing appraisals now? I have seen insurances ask for appraisals on buildings they have never really cared about replacement cost valuations before. Rec Centers, rental buildings, senior centers etc. Usefully it was always concentrated around condo corps.
