Yup, I'm on a soapbox again. Sorry about that.
So it was with glee that I opened up my inbox to a message from my friend and tireless supporter of my wordy crusades, Nat. She said today's paper might be of interest to me. I opened up the letters page to this missive from one Tom Chapman. As you'll see, he didn't much agree with my perspective on this issue (original column / blog post.) But I didn't care. He read. He wrote. The dialog continues. The fact that I get to cross words with readers in this way is very, very cool. Here's his letter:
Insurance 'gouging' a misconception
In his column, Public sours on insurance firms' sweet deal (Feb. 23), Carmi Levy adds his voice to the predictable bandwagon of outrage that followed the insurance industry's profit results for last year. Perhaps the oil industry is the only other business in which a large profit increase is proof positive of gouging. No other explanation is acceptable.
In recent years, insurance saw the worst combination of claims experience and poor investment returns. Profits plummeted to a level representing 1.7 per cent on equity two years ago. Last year, conditions were almost entirely reversed and returns on shareholders' equity rose to 20.6 percent. Is that too high? Is a total of $4.2 billion too high when it's spread among 206 companies? It only takes two of your big five chartered banks to reach that total. They all have returns on equity in that 20-per-cent vicinity. But they do it year after year!
Levy says we'll wait "ages" for rate reductions. I guess he missed it but, in response to widespread complaints and pressure from governments, some reductions actually occurred in 2004. If you didn't see any, try some real shopping around.
"Auto insurance," an agent once told me, "is a unique product. You're required by law to have it. But you're penalized if you use it."
Like the oil companies, insurance is an easy industry to hate. But gouging? No, not really.
Levy's diatribe follows the usual pattern, but it is unjustified and incorrect.