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

[Hendrik Verwoerd]

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

[alekhine4149]

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.

[Hendrik Verwoerd]

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.