This does explain all of the intercom messages telling employees not to wear safety belts and to take up smoking that I’ve been hearing at my local Wal Mart.
Cite please on the “Dead Peasant’s Policy”.
You can’t figure what’s called the combined ratio of an insurance company ((losses+expenses)/premium) over several years. It is figured out year by year. Thus in 2005 a company may take in premium on several thousand policies yet they pay out only on a handful. This applies to both life and property casualty insurers. As will all policies your premium is determined by the level of the risk of loss and the value of the policy. The higher the risk of a loss and the higher the limits of the policy; the higher the premium. Most insurance companies run at a combined ratio very near if not over just over 1:1, They make a profit only through short term investment of the premium collected.
Offering a “bulk rate” is never a good underwriting idea. Several insurance companies have gone under lately because of this sort of poor underwriting practice.
I was thinking that WalMart was taking out insurance on their really old ‘greeters’. You know those 70 year-olds that stand at the door and welcome you to the store. The company has got to collect on those long befor they pay in very much.
Unless WalMart is basically saying to the insurer, “Hey, you want our normal insurance business, then you are going to let out take out these policies as well.”
Those greeters though - how many of them are going to be working at Wal*Mart up until the day they die? I’d imagine that many of them would retire first, and then WM would have no claims on them for money.
Then the insurer will simply raise their rates across the board for Wal-Mart to take this into account.