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BT Policyholder Protection Blog
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07 Aug 2015 MORE ON INSURERS’ FLOAT – AN ILLUSTRATION

My March 24, 2015, post discussed the “true value” of a property/casualty insurer’s float, which includes not only the return the insurer makes on the money borrowed from its policyholders to pay future claims (i.e., total premiums), but also the avoided cost of borrowing that money (i.e., the “use value”). A few years ago I illustrated this point to the Minnesota legislature by compiling the following data on several insurers during a 15-year period, showing that the true value of the insurers’ float during that period averaged 24.1 percent per year – substantially higher than their average reported return on investment of 13.8 percent per year, and far higher than the single-digit statutory rate of prejudgment interest in a number of states that promotes insurer…

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24 Mar 2015 THE TRUE VALUE OF INSURERS’ FLOAT

When a policyholder is forced to engage in several years of litigation over an insurer’s denial of property/casualty coverage, and ultimately prevails in proving the denial was erroneous, is it fair that the insurer is required to pay only what it owed in the first place? Should the insurer also be required to disgorge the true value of the money it kept during those years? Some states address this issue by imposing double-digit prejudgment interest rates on the insurer, thereby helping to reduce the insurer’s incentive to delay resolution of the claim. In other states, however, with relatively nominal prejudgment interest rates, the insurer is rewarded by delay.   In considering this issue, it’s important to understand the true value of a property/casualty insurer’s “float.”…

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05 Dec 2014 Wasteland: How Old Insurance Policies Can be Used for Cleanup Costs

This month’s issue of National Geographic includes an interesting article and interactive map regarding the status of investigation and clean-up of Superfund sites throughout the country. See Paul Voosen, “Wasteland”, National Geographic (Dec. 2014). NG reports that treatment of site contamination is ongoing but incomplete at more than 1,160 sites, and another 95 sites remain uncontrolled. NG observes that “Money remains a constant problem” because the Superfund is nearly depleted. The Superfund taxes on crude oil and chemicals expired in 1995, and so the program has had to increasingly rely on general tax appropriations and recovery from responsible parties.   The NG article’s scope was limited to Superfund sites, and so did not address the numerous additional “Brownfield” sites around the nation that are not…

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