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Insurance companies have the opportunity to make some money on the held cash, or "the float," by investing it. The time between when a policy is issued, the premium is paid and the claims are paid out could constitute a number of years. n our parents' day, Oldsmobiles were pitched as putting a "rocket in your pocket," and auto insurance companies were as solid as well, the Rock of Gibraltar. People in this risk category typically choose VUL policies, with a very aggressive allocation, to meet their long-term auto insurance needs (typically 15 or more years) and guaranteed premium auto insurance for the full duration of their lengthiest purpose for automobile insurance (typically less than 15 years).

A market economy assures everyone of competitive pricing and quality products. If someone is charging too high of a price, it is only a matter of time before one or more of the hundreds or thousands of companies in a particular marketplace come back in with better pricing. Pricing trends do reflect the cost of risk being assumed by an insurer. Regulators need to get more comfortable with the idea that capital markets actually work. In order for us to provide the best products and services, we must be able to move more quickly as our customer's needs change.

There must also be more transparency relative to the operations of insurance companies, as well as more uniformity among the states when it comes to regulation. In the future, our industry must move to take more costs out of the operating structure. Underwriting results, not the ability to make returns on investments, determines the success of the insurer. While there is a chance to make some money on the float until it is paid out in claims, it should not drive the business or the financial results of the company. The Argonaut Insurance Group prefers a conservative investment portfolio where the security offsets the consistency of the yield on the investment. The majority of the money is invested in bonds and some publicly-held large stocks. There are regulations that limit the types of investments. A.M. Best was the sole rating agency assessing the financial health of America's insurers, and most of the top 100 (out of a field of more than 2,000) received the highest rating of A+. Name-brand carriers were respected and never failed.