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Minnesota: More on Insurers' Float - an Illustration

My March 24, 2015, post discussed the “true value” of a property/casualty insurer’s float, which includes not only the return the insurer makes on the money borrowed from its policyholders to pay future claims (i.e., total premiums), but also the avoided cost of borrowing that money (i.e., the “use value”). A few years ago I illustrated this point to the Minnesota legislature by compiling the following data on several insurers during a 15-year period, showing that the true value of the insurers’ float during that period averaged 24.1 percent per year – substantially higher than their average reported return on investment of 13.8 percent per year, and far higher than the single-digit statutory rate of prejudgment interest in a number of states that promotes insurer delay. For those who may wish to seek legislative reform on policyholder remedies, this type of data can be readily replicated from publicly available sources.

Click here to download the tables.

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minnesota, insurers float, insurance, stocks, policyholders

© 2020 BARNES & THORNBURG LLPNational Law Review, Volume V, Number 219

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About this Author

Thomas C. Mielenhausen, Barnes Thornburg Law Firm, Minneapolis, Insurance and Litigatio Law Attorney
Of Counsel (Retired)

For more than 25 years, Tom Mielenhausen devoted his practice exclusively to resolving insurance coverage disputes in favor of commercial policyholders throughout the U.S. He helped many types of businesses obtain successful outcomes through negotiation, alternative dispute resolution, and litigation in trial and appellate courts. Mr. Mielenhausen has extensive experience in resolving the often complex coverage issues associated with a variety of insurance policies, including:

  • Directors’ and officers’, errors and omissions, commercial...

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