By PETER ROSENTHAL, President
V.I.P. Trust Deed Company
October 2002
At the outset I will categorically state that I have no ties to the insurance industry. I don’t have a brother at State Farm. I don’t have stock in Allstate and I don’t sit on the board of ANYTHING.
Everybody loves to beat up on those big, bad, rich insurance companies. Years ago it was auto insurance premiums with a vocal consumer advocate (Harvey who?) and a Los Angeles city councilman leading the public outcry to stop insurance “gouging.” The FACT that insurance companies made VERY LITTLE, if any, money on automobile premiums versus claims was irrelevant to these “watchdogs.” Yes those companies made (in the old days) a lot of money on their investments but, as any businessperson knows, investments have nothing to do with annual business profit and loss. At that time I wrote a series of articles suggesting that these “watch dogs” put their money where their mouth was, and form their own insurance companies that offer cheaper policies and “make a fortune.” You cannot force insurance companies to lose money – they merely stop writing insurance in this state.
Along came the Northridge earthquake. That single event almost put one of the larger companies out of business. The State of California, in its infinite wisdom, tried to force good, inexpensive earthquake coverage on the industry. The industry simply stopped writing NEW insurance and there was a true insurance crisis for a while. At that time I again authored a series of articles reminding people to pay the premiums ON TIME and not make small claims, i.e. don’t lose your precious insurance.
Fast forward to today: the insurance industry has been slammed and knocked to its knees by huge mold claims and payouts on huge jury verdicts on dog bite cases. Insurance companies are again, losing money, but this time they are not making up for the loses with their investments. As a result several companies have AGAIN stopped writing new fire and homeowner policies. One large company has been hit so hard that they are not even RENEWING existing policies. Homeowners whose policies are canceling are frantic because the companies that are still in the business are extremely picky with new applications. Many companies won’t insure you if you own a Pit Bull Doberman or a Shepard; others won’t write new policies if you have ANY dog.
Once again your property insurance is gold; take my word for it. Pay your premiums a week IN ADVANCE. Don’t submit minor claims and by all means realize how critical good insurance is. I again call on the insurance industry critics to band together and start a new insurance company. Let’s call it the “Peoples Insurance Company;” good coverage and rates 20% below those “greedy companies.” How about it Harvey?
Peter Rosenthal
VIP Trust Deed Company