Sponsored Ads
Pauline Reimer, ASA, MAAA
Pryor Associates
Actuarial Openings: Life, P&C, Health, Pensions, Finance
Ezra Penland Actuarial Recruiters
Top Actuary Jobs
Salary Surveys Apply Bios Casualty Health Life Pension

Results 1 to 3 of 3

Thread: Why are P&C loss ratios so low? Why are sales expenses so high?

  1. #1
    Actuary.com - Level I Poster
    Join Date
    Jan 2010
    Location
    Oregon
    Posts
    6

    Why are P&C loss ratios so low? Why are sales expenses so high?

    Looking at some income statements loss ratios are around 50% and deferred acquisition costs 25% depending on the company.

  2. #2
    Actuary.com - Level IV Poster
    Join Date
    Jan 2008
    Location
    MI
    Posts
    467
    Regarding your first question, for some P&C lines of business, there is an extremely high level of variance and more cushion is needed to avoid financial ruin. Also, the fact that insurance is mandatory in certain lines (to comply with the law or to appease lenders) creates artificially high and fixed demand, and there isn't as much incentive to offer a competitive price as you would otherwise have.

  3. #3
    Actuary.com - Level I Poster
    Join Date
    Jan 2010
    Location
    Oregon
    Posts
    6
    But why are deferred acquisition costs so high? Isn't this mostly sales expense?

    Given the usual loss ratios I would expect return on equity to be higher for casualty insurers than the 12% average I've seen.

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Similar Threads

  1. Why are P&C loss ratios so low? Why are sales expenses so high?
    By Hendrik Verwoerd in forum Actuarial - General Discussion
    Replies: 0
    Last Post: January 7th 2010, 08:36 PM
  2. Estimating Loss Ratios
    By dalebid in forum Actuarial - Ask the Professor
    Replies: 2
    Last Post: March 29th 2007, 06:17 PM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •