| | | | Dear Reader, | In the past two weeks, we've seen a familiar disconnect: insurers report solid results, while households open renewal notices that feel anything but "better." Travelers' latest fourth-quarter underwriting results showed how profitable a disciplined insurer can look on paper, even as public frustration over affordability keeps rising. | For investors, retirees, and small business owners, the key is understanding why prices can climb after a "good year." The answer isn't a secret stash of premiums—it's the accounting engine underneath every policy: reserves and claims development. |
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| | | | | Which Stock Will The White House Buy Next? | | Insiders in Washington have already bought massive stakes in three tiny resource firms, driving them up as much as 200% overnight. Now, the man who recommended MP Materials before the White House bought (making 100% for his followers) is naming the next stocks he believes the government will target. | |
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| | | | | Why This Matters | Insurance works on a timing gap. Premiums arrive today. Many claims costs arrive later—and some arrive much later. | So insurers record a liability called loss reserves: what they expect to pay for claims that have already happened. A big component is incurred-but-not-reported (IBNR)—losses from events that occurred, but haven't shown up in the paperwork yet. Statutory accounting treats those estimates as real liabilities, not optional cushions, and the industry definition is explicit in regulatory guidance on IBNR reserving. | That conservatism is deliberate. Regulators and actuaries would rather an insurer reserve too much than discover it can't pay claims when the bills finally land. |
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| | | | | Where Things Stand | Inflation is still part of the story, but not the whole story. In the latest December CPI report, price pressures remained uneven across categories, and a recent BLS recap noted motor vehicle insurance prices rose 2.8% in 2025—a slowdown from the prior surge, but still upward. | Meanwhile, the industry is wrestling with a reserve reality that consumers don't see: repair costs, medical costs, and litigation trends that push ultimate claim totals higher than initial estimates. When those estimates deteriorate, insurers must strengthen reserves, and that flows straight into pricing—often with a lag. | Even reinsurance is a mixed signal. January 1 renewals brought some pricing relief in catastrophe coverage, according to the January 1 reinsurance renewal report. But cheaper reinsurance doesn't erase higher expected losses on the primary book—and if regulators or actuaries see greater uncertainty, insurers may still tighten underwriting or reduce exposure in tougher regions. | That's also why the political pressure is building. The recent affordability backlash is real—but it doesn't change the math of future claims. |
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| | | | | The Patriot Perspective | For investors, strong insurance companies aren't the ones "banking premiums." They're the ones reserving honestly, pricing risk steadily, and keeping enough capital to pay what they owe. For households, the best defense is shopping early, raising deductibles only if you can truly afford them, and focusing on financial resilience over wishful thinking. | Stay steady,
Kenneth Boyd
Author, Finance Writer, Former Investment Advisor & CPA |
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