I appreciate this incisive analysis of complex financial issues, considering how little, you pointed out, I know of how insurance cos make money. But, *could* it also be that these same companies may not write the particular policies and kinds of policies the consumer really needs to be written? Case in point, the Texas companies which are not writing homeowners' insurance. This has reached a crisis because of "bad faith" issues, btw. Mold gold, that is. Texas tea.
This has had some unpleasant effects on real estate and banking, because if you don't get homeowner's insurance, you don't get a mortgage. No mortgage, no home sale.
And, even if there will always be insurance companies to provide lawyers with settlement fees and plenty to complain about with other lawyers, we still might have to endure a lot of upheaval as insurance becomes scarce and expensive.
And, further, what happens when the consumer can't afford to pay premiums at all? That might make it tough on a lawyer, too. I think the phrase, "sqeezing blood from a turnip" about covers it.
A few limits in place, and that goose on life support might be able to churn out the golden eggs.
http://www.insurancejournal.com/news/newswire/national/2002/12/19/24982.htm
Please do note the following:
"Nevertheless, it is true that the price of insurance is directly related to return on investment. No one (including consumer advocates) seemed to mind during the 1990s when expectations of high rates of return on investments pushed the cost of insurance downward, but it must be recognized that this is a two-way street. If investment returns diminish, then any change in underlying costs must be offset by price increases and tighter underwriting."
And Texas is a strawman argument...the homeowners insurance market in Texas is poor, and State Farm over-extended themselves in that poor market.