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January 1, 2050 at 12:03 pm,
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Across the world, the combined ratio is too high is not by chance that non-life companies face a profitability problem.
An insurance company has a production based on a 'raw material’, whose cost is not known at the time of the insurance. So, they use a lot of actuarial models to find this cost.
Then, insurance companies sum all the other expenses and put a margin on top. And they say they have a "price".
But… summing up all costs loadings only gives ‘the total cost’, not a price!
How should an insurance company define it’s price?
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