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Sunday, 13 December 2020

The Worst Insurance Business ever?

I have been looking at the economic data provided each month in the economic reports.

i will start posting my charts and thoughts in the near future.

But one thing i came across which made my laugh is the Insurance isk flows.

Basically, whatever company pays the insurance for destroyed ships is losing about 3 trillion isk each month!

As we know, all ships are covered by insurance.  If a player takes out no additional insurance then the player will get 40% of a predetermined price for each hull (roughly based on the cost of production).

A player can then buy additional insurance which covers an additional 10% to an additional 60% (i.e. 100%).  This additional insurance is valid for 12 weeks.

Only the hull is covered, not any modules, rigs or assets in the various holds.

And no insurance is paid if the ship is destroyed by CONCORD.

So far, so good.

The monthly data shows us the Insurance payments made to players and the insurance premiums paid by players.  And so, from that, we can get an idea if this insurance company behind it all is making or losing isk.

The chart below shows exactly this for the available data: the top left chart shows the monthly payments made to players from February 2016 to October 2020; the bottom left chart shows the insurance premiums paid by players (i.e. insurance bought); and the top right chart therefore shows the net effect (negative = losses to the insurance company).

Needless to say, this insurance company is always paying out more to players each month than it receives in insurance premiums.

The monthly loss (i.e. ISK flowing into Eve Online and out of this Insurance Business) is about 3 trillion!

Each month the insurance business pays players about 4 to 6 trillion isk whilst it receives 2 to 3 trillion isk from players buying insurance.

I don't know how the numbers would change if the 40% payout was no longer made (players don't need to make any payment for that).

and, of course, this insurance business could collect the premiums, invest them in the market to make 6 trillion isk a month and then pay out the 4-6 trillion and so be profitable (thats how many insurance companies operate today - they don't make money on the insurance, they make money by investing the insurance premiums they get at the start of the year which more than covers the insurance payments they need to make).

There we go, madness for a business to write insurance in a war zone!

1 comment:

  1. Ha. I was just thinking about this the other day while doing some of the noobie missions that require you to have your ship blown up. Seems like thinly veiled insurance scams when you insure at the highest rate right before.