> Last year, former USAA CEO Wayne Peacock received $14.1 million in total compensation from five USAA insurance companies for working slightly more than a quarter of 2025 before his retirement. That was a 47% increase from the $9.6 million he received in salaries and bonuses in 2024. Other executives at USAA also received pay boosts in 2025.
At about 1M policy holders that’s about $14 per policy. Not bad for a couple months work.
The 1.2 million members number in the article was for Texas. Total is somewhere around ~14 million, or $1 per in the time, which is still silly but not as insanely.
At this point, I buy all insurance (home, auto, health etc.) with highest deductible and lowest premium knowing that there is a high probability that insurance will not pay (or pay only partially). I mainly buy insurance to avoid catastrophic losses and hope that, if such an event were to happen, they would cover the loss at least partially. For smaller losses I am willing to absorb the loss and save money on premium every year. The money saved on premium can be used (to some extent) to cover the loss of the denied claim. Also, in the event of a loss, having high deductible discourages me from filing claim which keeps premium low for subsequent years.
What do you consider catastrophic loss? I’ve found in home insurance the delta on lower deductibles isn’t that meaningful and when something happens, the pay out is almost always worth it. Something like water damage from a burst pipe can be 20-50k very quickly, and having to pay a 10k deductible is quite a big hit in addition to the remediation needed.
By catastrophic loss I mean an event that has the potential of causing bankruptcy (such as house burned to the ground). Home insurance rates vary a lot depending on where you live so our math is likely very different and we both could be right. While a big expense in one shot definitely pinches more, paying higher premiums every year, the annual premium hikes, in addition to raised premium for subsequent years due to filing a claim can also add up to a lot surreptitiously.
Total loss being the bar seems crazy to me. A 20-50k unexpected expense for almost everyone would essentially result in bankruptcy or at minimum insolvency and long term debt.
That means you would need to hold enough money in short term accessible money (HYSA, etc) to self insure in that scenario, which is unachievable for most people.
Insurance should set a maximum cap to your pain no matter the circumstances… and I think the pain being >50k is quite unreasonable unless we’re talking about property that is worth in the millions.
Your point is perfectly valid. There is no single right answer. It just depends on what risk level one is comfortable with and that varies from person to person.
I’d agree there’s no single right answer, but I think generally a risk profile for an insurance product that is so outsized against you seems like a poor decision.
This isn’t like putting all your money in meme stocks or something, this is more akin to selling risky stock options. The downside potential is massive and essentially uncapped, whereas the upside potential is meager.
When me and my wife were purchasing our first home, we had everyone from mortgage people to realtors to our own friends and family that owned homes tell us to never use our home insurance unless it was something truly catastrophic.
Currently our home insurance deductible is $10k. The logic is that anything less than that we can pay ourselves. Home insurance is only there to cover either catastrophic damage or really, a total loss.
For things you can cover, external insurance will be more expensive than self-insurance because you aren't paying for random CEOs. (Unless you've captured some and are tending to them)
A touch of nuance from someone in the industry (CTO at a startup that sells home and umbrella insurance):
Most of the issues here stem from problem the sales as opposed to the claims process. Customers are, structurally, under-educated on what their policies actually cover and this produces unrealistic expectations about what they should file claims for.
Emphatically, this is not their fault but an industry-wide issue that has complex causes like brokers/salespeople getting increasingly squeezed to produce as well as the intense time pressure under which many folks purchase their homeowners insurance policy (folks are often sprinting to check this box to secure a mortgage). Sadly, there is also a strong correlation between consumers experiencing worse socioeconomic conditions and failed claims. This, to me, generally suggests that some behavioral insights should be brought into the sale and management of the financial product to better protect these buyers' interests.
It is important to highlight and understand this point of failure because: 1) claims (even failed ones) are one of the easiest ways to get your rates jacked up as this is a category that insurers are allowed to price on. 2) The common response to articles like this is that "of course insurance should cover more things" but this counterintuitively risks creating more dead-weight loss for consumers broadly in the form of coverage for things that we simply shouldn't be insuring (and instead should be maintaining and replacing).
All that is to say: ask your broker / agent what's in your contract. Do it BEFORE you have a claim to file as in some cases speaking to them (especially captive agents) may in and of itself trigger a claim.
AI-native brokerages (like what we've built) are part of the solution to this problem since well-constrained LLMs can help buyers and users get a much better sense of what their contracts actually cover, and whether or not they should submit a claim.
What do you guys do when the LLM hallucinates? Someone puts a claim in on the basis of what the LLM instructed and its false, are you still taking responsibility? Geniune question, interesting to see where the liability is resting in a regulated industry as opposed to just chat bots.
This is interesting because it doesn't fit with my own experiences dealing with USAA home or auto insurance claims. During 2025 we had contacted them twice to file claims and in both cases the claims were paid according to the existing policy coverage level with zero hassle. Our initial contacts were by telephone and almost all of the paperwork was managed thru their online portal with follow-up phone calls to insure that everything was in order. Their claims reps arrived as scheduled, evaluated covered damages, and submitted documentation to support our claims.
In one case dealing with our house, I discovered a calculation error in my favor and submitted the corrected documentation to them. After examining that data they agreed and modified the claim to correct that error.
With the exception of the adjuster visits, all contacts with USAA were managed over the telephone or thru texts and emails. They are efficient and easy to reach.
I can see where USAA's statements that the numbers are off. From the article:
>In a statement, USAA said the association’s data is misleading because it lacks context about why a claim may be closed without payment. Those factors could include claims that were later reopened, claims covered under separate policies or multiple claims from a single event that are consolidated into one case.
This is my experience too. In our auto claim, the dealership expressed relief that we had "US PayPay" for our insurer. No (or less) nickel and diming apparently and smooth payment.
That "US PayPay" is pretty funny. That is similar to the name our dealership adjuster called them. He said that they are very good about coverage and will work with repair facilities to get the vehicles back on the road. I wanted them to skip the aftermarket parts for our car and just use OEM parts, some on which had to be shipped from Japan (older vehicle), and they approved everything and checked with us after the work was complete to make sure we were satisfied with the repair facility (a local dealership's shop).
Our roofing contractor said pretty much the same thing. He said they are comprehensive in their damage assessments so the coverage quoted after their rep visits tends to be very close to actual damages that should be repaired. They will adjust if you can document something they missed. Very easy to work with, he said.
USAA doesn't operate its own mortgages anymore. They sell them day one which usually results in another sale or company acquisition within a year. The cure? Take your business elsewhere. FCUs don't have this same reputation and generally open with less predatory rates.
USAA had a great run of building trust and is speedrunning torching it.
What does this have to do with their insurance business? As far as I can tell this is just a random complaint about USAA.
And it doesn’t even make sense financially. The “brand” of your mortgage provider adds absolutely nothing to the utility. When shopping for a mortgage, just pick the lowest possible rate, it does not matter from whom. Loans get sold all the time and that is a good thing as it helps minimize rates through raw competition.
USAA at one time had aims of being a comprehensive financial company and they gave those up years ago. Brokerages got sold to Schwab, IRAs to Victory, etc. Again, this is a good thing as there was no way they were going to be able to compete in all those categories. Specialization is good.
I use State Farm for insurance. They’ve have similar issues, but are also about to pay out their largest dividend of $5B to auto policy holders as a mutual company (owned by their policyholders) due to underwriting performance.
For mortgages, I can recommend Digital Federal Credit Union (DCU), now merged with First Tech. They held the note and the servicing.
Does USAA sell the servicing too? Most credit unions sell their mortgages, but as long as they retain the servicing rights (which seems to be less and less), the borrower should be in good hands.
In a statement, USAA said the association’s data is misleading because it lacks context about why a claim may be closed without payment. Those factors could include claims that were later reopened, claims covered under separate policies or multiple claims from a single event that are consolidated into one case.
“When all factors are included, less than 6% of USAA homeowner claims were denied without payment,” USAA said. “Most claims closed without payment involve losses below a member’s deductible or claims the homeowner chooses not to pursue.”
Dropping all forms of insurance was the #1 motivation for me to pay off my mortgage. My rate was under 3%, but insurance is absolutely brutal once you factor in the bureaucratic hell that must be navigated to get any kind of payout. The premiums are off the charts too. $10k+/yr for a ~$350k cardboard box in Texas is absolutely insane.
The biggest scam I've seen in real estate is mandatory windstorm insurance (TWIA & friends). I've been through multiple hurricanes where claims were involved and it would have been significantly better if the premiums were simply left in a savings account to compound over time.
Any kind of disaster that would require complete reconstruction of your home would likely violate whatever "act of god" clause happens to exist in literally every policy. Not having insurance is not equivalent to being at risk for the total property value (in any practical sense). $10k goes a long way when you are repairing wood and plastic that is mostly still standing. If you are fortunate enough to have a few years between catastrophes (as typically you do), then it's generally never a problem.
A simple rule for today's economy: If you cannot afford the property on cash basis, you should probably try to find a cheaper property. The risk of mandatory insurance premiums creeping up into the danger zone is too high. Even if it starts out OK, you may find that your escrow account requirements start to outpace your principal and interest obligations over the years.
Note that there are four different USAA insurance companies. Your military rank and how you got referred for membership will determine which one you join (listed highest/best to lowest):
United Services Automobile Association - Officers and senior NCOs
USAA Casualty Insurance Company - Enlisted (E-1 to E-7) and children of the above
USAA General Indemnity Company - National Guard, Reserve
Garrison Property and Casualty - Extended family of the above
I can't get past the article's paywall to view the 51% rate, but I expect your claim process experience will vary based on which company is insuring you.
I have noticed that the quality of service has declined over the past 5 years or so (which lines up with Peacock's being CEO). It sometimes takes 2 or 3 calls to answer a question with my policies these days, as they now have high turnover in the call center.
I live around at around a 150ft elevation above the ocean, but technically within < 1 mile away from it. Despite zero risk of flodding, half of the bigger insurers in my area have exited the market, and we are now having to insure with higher risk insurers like Kingston, who's ratings are yet to be tested during a real emergency.
My car insurance is above $4k/yr for two family cars, rising annually despite no accidents.
Meanwhile, "normal" countries are solving these problems in reasonable ways. Back home in Central Europe, you get state mandated car insurance at pre-negotiated rates that are based on the car, not the driver.
I think you may not fully understand how much more expensive insurance is in the US and how bad of a deal you get here.
In the Netherlands my standard car insurance came with a bodily injury liability limit of 6.5MM and property damage liability limit of 2.5MM at a cost of only around €25 per month.
You usually cannot even get limits that high from insurers in US, let alone at such a cheap rate.
My experience with USAA is still that it's better than all of the other insurers, but I haven't had to make any homeowners claims. They have done very well every time my family had to make an auto claim - still only a couple of times, but it was very clean and no-BS.
I hate dealing with USAA, and probably should have had a life insurance policy before I even tried. Their phone trees are designed to misdirect you, the agents do not help at all (let me transfer you...[half hour hold time]...Sorry wrong department, let me transfer you), you can't get any real information from anyone. I had to start taking down phone session ID's from the reps and asking for customer advocates to get anywhere at all. Terrible experience.
I still have their awful jingle stuck in my head played over hours of holding on the phone, I'll probably turn into a Manchurian candidate if I ever hear it again.
I thought I was a typical guy who bought insurance and hardly ever claimed. I was genuinely shocked after talking to people who regularly tried to claim all the time. "Nothing to lose right?".
After realizing I've really stopped buying insurance except a core of home, car and liability with high deductables. If you're a responsible person who is careful insurance really isn't worth the cost.
You need a capital base in proportion to the policies you sell in order to pay them out without going bust, to a certain confidence level. The time sequence of premium payments vs when the risk is expected to come due for a payout is factored in.
The 50 states regulate insurance in the US and issue rules about how to do this, some of which affect competition and pricing in heavy handed ways, sometimes it's overtly political.
In general though insurance is an extremely competitive field. Margins for the most part are similar or lower than other industries.
Not sure where the popular impression that it is not competitive comes from. If anything I think the sword cuts both ways, the friction in the process is probably more a symptom of competitiveness more than its absence.
> Not sure where the popular impression that it is not competitive comes from
The fact that it goes up 20-30% every year (no claims, obviously), that I cannot raise my deductibles to significantly lower my premiums, the whole skin-job of "agents" that provide an illusion of choices to confuse the market, and that they've bought a friendly regulatory regime that lets them price discriminate by capping coverage maximums when the whole point of insurance is to cover long-tail risks. Never mind that their chief "innovation" over the past few years has been pushing surveillance devices that track your driving, finding reasons to cancel policies, and whatnot.
I've also bumped into a few different people who shut down their small businesses over untenable commercial rates. The whole industry is a massive drag on our economy. I've no doubt that the accountants/actuaries find places for the money to go that isn't just executives' pockets, but that's of little consolation.
Multiple resources on the internet put the startup costs at $500K or less. That's not much more than fast food or other high touch retail startups by comparison.
There are certainly a few steps on the learning curve but it's mostly high school and undergraduate math that is needed. That puts it out of reach for some but the field is pretty flat once you get there, is my perspective having considered and opted against getting into it.
It is a commodity product but, again, the regulatory and capital hurdles to get started are significant. As you scale you need more and the exact reserve requirements are often at the discretion of regulators. Opening a McDonalds franchise it is not.
Insurance companies don't invent anything, they don't control interest rates, don't risk much of their owners' money, and in many cases the state obligates people to buy your service, so in that sense it's easy.
To me, the hardest part is competing for the small number of intelligent people who are interested in such a dull, fundamentally scammy business.
they've slowly gone from being one of the most progressive and customer focused financial institutions (they invented at home electronic deposit of checks) to a gross regular bank / insurance company.
> Last year, former USAA CEO Wayne Peacock received $14.1 million in total compensation from five USAA insurance companies for working slightly more than a quarter of 2025 before his retirement. That was a 47% increase from the $9.6 million he received in salaries and bonuses in 2024. Other executives at USAA also received pay boosts in 2025.
At about 1M policy holders that’s about $14 per policy. Not bad for a couple months work.
The 1.2 million members number in the article was for Texas. Total is somewhere around ~14 million, or $1 per in the time, which is still silly but not as insanely.
At this point, I buy all insurance (home, auto, health etc.) with highest deductible and lowest premium knowing that there is a high probability that insurance will not pay (or pay only partially). I mainly buy insurance to avoid catastrophic losses and hope that, if such an event were to happen, they would cover the loss at least partially. For smaller losses I am willing to absorb the loss and save money on premium every year. The money saved on premium can be used (to some extent) to cover the loss of the denied claim. Also, in the event of a loss, having high deductible discourages me from filing claim which keeps premium low for subsequent years.
What do you consider catastrophic loss? I’ve found in home insurance the delta on lower deductibles isn’t that meaningful and when something happens, the pay out is almost always worth it. Something like water damage from a burst pipe can be 20-50k very quickly, and having to pay a 10k deductible is quite a big hit in addition to the remediation needed.
By catastrophic loss I mean an event that has the potential of causing bankruptcy (such as house burned to the ground). Home insurance rates vary a lot depending on where you live so our math is likely very different and we both could be right. While a big expense in one shot definitely pinches more, paying higher premiums every year, the annual premium hikes, in addition to raised premium for subsequent years due to filing a claim can also add up to a lot surreptitiously.
Total loss being the bar seems crazy to me. A 20-50k unexpected expense for almost everyone would essentially result in bankruptcy or at minimum insolvency and long term debt.
That means you would need to hold enough money in short term accessible money (HYSA, etc) to self insure in that scenario, which is unachievable for most people.
Insurance should set a maximum cap to your pain no matter the circumstances… and I think the pain being >50k is quite unreasonable unless we’re talking about property that is worth in the millions.
Your point is perfectly valid. There is no single right answer. It just depends on what risk level one is comfortable with and that varies from person to person.
I’d agree there’s no single right answer, but I think generally a risk profile for an insurance product that is so outsized against you seems like a poor decision.
This isn’t like putting all your money in meme stocks or something, this is more akin to selling risky stock options. The downside potential is massive and essentially uncapped, whereas the upside potential is meager.
When me and my wife were purchasing our first home, we had everyone from mortgage people to realtors to our own friends and family that owned homes tell us to never use our home insurance unless it was something truly catastrophic.
Currently our home insurance deductible is $10k. The logic is that anything less than that we can pay ourselves. Home insurance is only there to cover either catastrophic damage or really, a total loss.
We 'pruned' our coverage and put the savings into an account labeled 'self-insurance'.
Wise economically.
For things you can cover, external insurance will be more expensive than self-insurance because you aren't paying for random CEOs. (Unless you've captured some and are tending to them)
A touch of nuance from someone in the industry (CTO at a startup that sells home and umbrella insurance):
Most of the issues here stem from problem the sales as opposed to the claims process. Customers are, structurally, under-educated on what their policies actually cover and this produces unrealistic expectations about what they should file claims for.
Emphatically, this is not their fault but an industry-wide issue that has complex causes like brokers/salespeople getting increasingly squeezed to produce as well as the intense time pressure under which many folks purchase their homeowners insurance policy (folks are often sprinting to check this box to secure a mortgage). Sadly, there is also a strong correlation between consumers experiencing worse socioeconomic conditions and failed claims. This, to me, generally suggests that some behavioral insights should be brought into the sale and management of the financial product to better protect these buyers' interests.
It is important to highlight and understand this point of failure because: 1) claims (even failed ones) are one of the easiest ways to get your rates jacked up as this is a category that insurers are allowed to price on. 2) The common response to articles like this is that "of course insurance should cover more things" but this counterintuitively risks creating more dead-weight loss for consumers broadly in the form of coverage for things that we simply shouldn't be insuring (and instead should be maintaining and replacing).
All that is to say: ask your broker / agent what's in your contract. Do it BEFORE you have a claim to file as in some cases speaking to them (especially captive agents) may in and of itself trigger a claim.
AI-native brokerages (like what we've built) are part of the solution to this problem since well-constrained LLMs can help buyers and users get a much better sense of what their contracts actually cover, and whether or not they should submit a claim.
What do you guys do when the LLM hallucinates? Someone puts a claim in on the basis of what the LLM instructed and its false, are you still taking responsibility? Geniune question, interesting to see where the liability is resting in a regulated industry as opposed to just chat bots.
This is interesting because it doesn't fit with my own experiences dealing with USAA home or auto insurance claims. During 2025 we had contacted them twice to file claims and in both cases the claims were paid according to the existing policy coverage level with zero hassle. Our initial contacts were by telephone and almost all of the paperwork was managed thru their online portal with follow-up phone calls to insure that everything was in order. Their claims reps arrived as scheduled, evaluated covered damages, and submitted documentation to support our claims.
In one case dealing with our house, I discovered a calculation error in my favor and submitted the corrected documentation to them. After examining that data they agreed and modified the claim to correct that error.
With the exception of the adjuster visits, all contacts with USAA were managed over the telephone or thru texts and emails. They are efficient and easy to reach.
I can see where USAA's statements that the numbers are off. From the article:
>In a statement, USAA said the association’s data is misleading because it lacks context about why a claim may be closed without payment. Those factors could include claims that were later reopened, claims covered under separate policies or multiple claims from a single event that are consolidated into one case.
This is my experience too. In our auto claim, the dealership expressed relief that we had "US PayPay" for our insurer. No (or less) nickel and diming apparently and smooth payment.
That "US PayPay" is pretty funny. That is similar to the name our dealership adjuster called them. He said that they are very good about coverage and will work with repair facilities to get the vehicles back on the road. I wanted them to skip the aftermarket parts for our car and just use OEM parts, some on which had to be shipped from Japan (older vehicle), and they approved everything and checked with us after the work was complete to make sure we were satisfied with the repair facility (a local dealership's shop).
Our roofing contractor said pretty much the same thing. He said they are comprehensive in their damage assessments so the coverage quoted after their rep visits tends to be very close to actual damages that should be repaired. They will adjust if you can document something they missed. Very easy to work with, he said.
I’ve had similar experience with USAA
I had a leak and they covered an entire new hardwood floor for the deductible cost with basically no questions and a handful of pictures
my rates are reasonable for everything
I agree. They are easy to work with. Easy to reach online or over the phone. I'm glad we switched all those years ago.
USAA doesn't operate its own mortgages anymore. They sell them day one which usually results in another sale or company acquisition within a year. The cure? Take your business elsewhere. FCUs don't have this same reputation and generally open with less predatory rates.
USAA had a great run of building trust and is speedrunning torching it.
What does this have to do with their insurance business? As far as I can tell this is just a random complaint about USAA.
And it doesn’t even make sense financially. The “brand” of your mortgage provider adds absolutely nothing to the utility. When shopping for a mortgage, just pick the lowest possible rate, it does not matter from whom. Loans get sold all the time and that is a good thing as it helps minimize rates through raw competition.
USAA at one time had aims of being a comprehensive financial company and they gave those up years ago. Brokerages got sold to Schwab, IRAs to Victory, etc. Again, this is a good thing as there was no way they were going to be able to compete in all those categories. Specialization is good.
Who should people use instead? I switched to USAA because of their good reputation after bad experiences.
I’ve heard good things about Farmers and USAA. Never anything positive about another.
I use State Farm for insurance. They’ve have similar issues, but are also about to pay out their largest dividend of $5B to auto policy holders as a mutual company (owned by their policyholders) due to underwriting performance.
For mortgages, I can recommend Digital Federal Credit Union (DCU), now merged with First Tech. They held the note and the servicing.
https://sfdividend.com/
https://www.firsttechfed.com/merger
State Farm is slightly more expensive than others.
From a policy standpoint, this works out really well for them as the bottom feeders aren't their customers, so they have fewer claims.
Does USAA sell the servicing too? Most credit unions sell their mortgages, but as long as they retain the servicing rights (which seems to be less and less), the borrower should be in good hands.
In a statement, USAA said the association’s data is misleading because it lacks context about why a claim may be closed without payment. Those factors could include claims that were later reopened, claims covered under separate policies or multiple claims from a single event that are consolidated into one case.
“When all factors are included, less than 6% of USAA homeowner claims were denied without payment,” USAA said. “Most claims closed without payment involve losses below a member’s deductible or claims the homeowner chooses not to pursue.”
Dropping all forms of insurance was the #1 motivation for me to pay off my mortgage. My rate was under 3%, but insurance is absolutely brutal once you factor in the bureaucratic hell that must be navigated to get any kind of payout. The premiums are off the charts too. $10k+/yr for a ~$350k cardboard box in Texas is absolutely insane.
The biggest scam I've seen in real estate is mandatory windstorm insurance (TWIA & friends). I've been through multiple hurricanes where claims were involved and it would have been significantly better if the premiums were simply left in a savings account to compound over time.
Any kind of disaster that would require complete reconstruction of your home would likely violate whatever "act of god" clause happens to exist in literally every policy. Not having insurance is not equivalent to being at risk for the total property value (in any practical sense). $10k goes a long way when you are repairing wood and plastic that is mostly still standing. If you are fortunate enough to have a few years between catastrophes (as typically you do), then it's generally never a problem.
A simple rule for today's economy: If you cannot afford the property on cash basis, you should probably try to find a cheaper property. The risk of mandatory insurance premiums creeping up into the danger zone is too high. Even if it starts out OK, you may find that your escrow account requirements start to outpace your principal and interest obligations over the years.
I would pretty much disagree with everything here.
Paying off a 3% mortgage means you could not invest that money, which would return 7% on average or like 10+% recently. That is a lot of lost money.
Anyone whos not L5 at bigtech cannot afford any home on a cash basis. That’s not a realistic bar.
That being said, insurance is wildly different by state and location and it sounds like it royally sucks in Texas.
Some web research:
Car insurance premiums grew 3.8% to 5.4% annually over 30 years, compared to 2.4% average inflation rate. Why?
Complex technology and labor required to fix cars.
Costly claims for rising medical bills, increased litigation, severe climate weather damage, and distracted driving accidents from smartphones
The last 3 years, profit is way up from excess cash after post-pandemic rate increases. Before that, profit wasn't great.
Note that there are four different USAA insurance companies. Your military rank and how you got referred for membership will determine which one you join (listed highest/best to lowest):
United Services Automobile Association - Officers and senior NCOs
USAA Casualty Insurance Company - Enlisted (E-1 to E-7) and children of the above
USAA General Indemnity Company - National Guard, Reserve
Garrison Property and Casualty - Extended family of the above
I can't get past the article's paywall to view the 51% rate, but I expect your claim process experience will vary based on which company is insuring you.
I have noticed that the quality of service has declined over the past 5 years or so (which lines up with Peacock's being CEO). It sometimes takes 2 or 3 calls to answer a question with my policies these days, as they now have high turnover in the call center.
I’ve been with USAA since 2007 and wasn’t aware of these tiers
More info: https://www.reddit.com/r/USAA/comments/12ww8fz/where_can_i_f...
I live around at around a 150ft elevation above the ocean, but technically within < 1 mile away from it. Despite zero risk of flodding, half of the bigger insurers in my area have exited the market, and we are now having to insure with higher risk insurers like Kingston, who's ratings are yet to be tested during a real emergency.
My car insurance is above $4k/yr for two family cars, rising annually despite no accidents.
Meanwhile, "normal" countries are solving these problems in reasonable ways. Back home in Central Europe, you get state mandated car insurance at pre-negotiated rates that are based on the car, not the driver.
US insurance is a scam.
>> Rates that are based on the car, not the driver.
I like my low very rates. I don't want to pay higher rates for people who can't parallel park. They can suffer their skill issues.
I think you may not fully understand how much more expensive insurance is in the US and how bad of a deal you get here.
In the Netherlands my standard car insurance came with a bodily injury liability limit of 6.5MM and property damage liability limit of 2.5MM at a cost of only around €25 per month.
You usually cannot even get limits that high from insurers in US, let alone at such a cheap rate.
My experience with USAA is still that it's better than all of the other insurers, but I haven't had to make any homeowners claims. They have done very well every time my family had to make an auto claim - still only a couple of times, but it was very clean and no-BS.
I hate dealing with USAA, and probably should have had a life insurance policy before I even tried. Their phone trees are designed to misdirect you, the agents do not help at all (let me transfer you...[half hour hold time]...Sorry wrong department, let me transfer you), you can't get any real information from anyone. I had to start taking down phone session ID's from the reps and asking for customer advocates to get anywhere at all. Terrible experience.
I still have their awful jingle stuck in my head played over hours of holding on the phone, I'll probably turn into a Manchurian candidate if I ever hear it again.
I thought I was a typical guy who bought insurance and hardly ever claimed. I was genuinely shocked after talking to people who regularly tried to claim all the time. "Nothing to lose right?".
After realizing I've really stopped buying insurance except a core of home, car and liability with high deductables. If you're a responsible person who is careful insurance really isn't worth the cost.
lets see how corgi holds up in a few years
So? What should be the correct rate of accepted claims? Or should companies simply accept all insurance claims?
is it easy or hard to start an insurance company? why isn't there more competition when it comes to insurance?
You need a capital base in proportion to the policies you sell in order to pay them out without going bust, to a certain confidence level. The time sequence of premium payments vs when the risk is expected to come due for a payout is factored in.
The 50 states regulate insurance in the US and issue rules about how to do this, some of which affect competition and pricing in heavy handed ways, sometimes it's overtly political.
In general though insurance is an extremely competitive field. Margins for the most part are similar or lower than other industries.
Not sure where the popular impression that it is not competitive comes from. If anything I think the sword cuts both ways, the friction in the process is probably more a symptom of competitiveness more than its absence.
> Not sure where the popular impression that it is not competitive comes from
The fact that it goes up 20-30% every year (no claims, obviously), that I cannot raise my deductibles to significantly lower my premiums, the whole skin-job of "agents" that provide an illusion of choices to confuse the market, and that they've bought a friendly regulatory regime that lets them price discriminate by capping coverage maximums when the whole point of insurance is to cover long-tail risks. Never mind that their chief "innovation" over the past few years has been pushing surveillance devices that track your driving, finding reasons to cancel policies, and whatnot.
I've also bumped into a few different people who shut down their small businesses over untenable commercial rates. The whole industry is a massive drag on our economy. I've no doubt that the accountants/actuaries find places for the money to go that isn't just executives' pockets, but that's of little consolation.
The capital requirements and regulatory barriers to start an insurer are extremely high.
There are lots of small insurers at least.
Multiple resources on the internet put the startup costs at $500K or less. That's not much more than fast food or other high touch retail startups by comparison.
There are certainly a few steps on the learning curve but it's mostly high school and undergraduate math that is needed. That puts it out of reach for some but the field is pretty flat once you get there, is my perspective having considered and opted against getting into it.
In other words, there's no moat in insurance.
It is a commodity product but, again, the regulatory and capital hurdles to get started are significant. As you scale you need more and the exact reserve requirements are often at the discretion of regulators. Opening a McDonalds franchise it is not.
See for example the minimums here: https://www.insurance.ca.gov/0250-insurers/0300-insurers/010....
Insurance companies don't invent anything, they don't control interest rates, don't risk much of their owners' money, and in many cases the state obligates people to buy your service, so in that sense it's easy.
To me, the hardest part is competing for the small number of intelligent people who are interested in such a dull, fundamentally scammy business.
they've slowly gone from being one of the most progressive and customer focused financial institutions (they invented at home electronic deposit of checks) to a gross regular bank / insurance company.
It seems like credit unions are basically superior to regular banks. Is this not true?