FSCS - How much of *everyone's* cash can they insure

dunstonh

Sea_Shell said:

Malthusian said:

If everyone insured by life insurance providers died, the insurers wouldn't be able to cover close to 1% of the sum they've committed to paying. That doesn't matter either and they can't even print money.

In the event of an economic meltdown nobody will care whether the FSCS can pay out enough worthless money to meet everyone's deposits or not, because the economy will have melted down.

In the event of a bog-standard collapse of a major bank, like those in 2008, either the FSCS will pay out or, as wmb194 said, it won't even get that far. The #1 priority of the government will be to ensure that depositors don't start queuing round the block en masse to withdraw their cash and stuff it under the floorboards, as that would turn a bog-standard banking crisis into economic meltdown.

That made me wonder if the life insurance providers have been adversely affected by the excess deaths figures caused by Covid?   It's not made "the news" so it seems not to have.

How bad would the death rate have to have been, amongst the "insured" for it to really start to bite the industry.

Insurers have pulled out of some markets, tightened underwriting decisions and increased premiums.   Insurers play a longer game on finances compared to banks.

AlanP_2

tranquility1 said:

wmb194 said:

In practice governments will (part) nationalise, broker mergers and otherwise prop up important banks before it gets to the point that the FSCS and other deposit protection schemes are called upon e.g., RBS, HBOS, Lloyds here and ABN Amro and ING in The Netherlands during the GFC.

The recently announced "bail ins" mean that public funds are no longer to be used for propping up failed banks etc.  This cost will now be borne by the investors.

But apparently the investors money is safe up to £85K, which is contradictory in a sense.  

The money people have invested in banks i.e. the shares they hold is not covered by the FSCS if the bank gets in to difficulties, in the same way as the shareholders in HMV or Woolworths weren't protected.

Depositors on the other hand, who are using the bank as a place to store their cash, are protected up to £85k and (AFAIK) the bail-in concept is of no relevance to them.

tranquility1

jimjames said:

tranquility1 said:

Malthusian said:

If everyone insured by life insurance providers died, the insurers wouldn't be able to cover close to 1% of the sum they've committed to paying. That doesn't matter either and they can't even print money.

In the event of an economic meltdown nobody will care whether the FSCS can pay out enough worthless money to meet everyone's deposits or not, because the economy will have melted down.

In the event of a bog-standard collapse of a major bank, like those in 2008, either the FSCS will pay out or, as wmb194 said, it won't even get that far. The #1 priority of the government will be to ensure that depositors don't start queuing round the block en masse to withdraw their cash and stuff it under the floorboards, as that would turn a bog-standard banking crisis into economic meltdown.

Hence why owning gold is a good insurance policy.

Not really unless you have very small denominations and hold it yourself. Gold bars held elsewhere or ETF won't be much use.

I agree.  Having a few gold sovereigns stashed away is the ultimate insurance policy for a banking collapse and hyper inflation etc etc.

tranquility1

Sea_Shell said:

Malthusian said:

If everyone insured by life insurance providers died, the insurers wouldn't be able to cover close to 1% of the sum they've committed to paying. That doesn't matter either and they can't even print money.

In the event of an economic meltdown nobody will care whether the FSCS can pay out enough worthless money to meet everyone's deposits or not, because the economy will have melted down.

In the event of a bog-standard collapse of a major bank, like those in 2008, either the FSCS will pay out or, as wmb194 said, it won't even get that far. The #1 priority of the government will be to ensure that depositors don't start queuing round the block en masse to withdraw their cash and stuff it under the floorboards, as that would turn a bog-standard banking crisis into economic meltdown.

That made me wonder if the life insurance providers have been adversely affected by the excess deaths figures caused by Covid?   It's not made "the news" so it seems not to have.

How bad would the death rate have to have been, amongst the "insured" for it to really start to bite the industry.

Were there actually excess deaths overall though?  And with an average age of 82, I doubt the families of those insured would have received much money.

Sea_Shell

tranquility1 said:

Sea_Shell said:

Malthusian said:

If everyone insured by life insurance providers died, the insurers wouldn't be able to cover close to 1% of the sum they've committed to paying. That doesn't matter either and they can't even print money.

In the event of an economic meltdown nobody will care whether the FSCS can pay out enough worthless money to meet everyone's deposits or not, because the economy will have melted down.

In the event of a bog-standard collapse of a major bank, like those in 2008, either the FSCS will pay out or, as wmb194 said, it won't even get that far. The #1 priority of the government will be to ensure that depositors don't start queuing round the block en masse to withdraw their cash and stuff it under the floorboards, as that would turn a bog-standard banking crisis into economic meltdown.

That made me wonder if the life insurance providers have been adversely affected by the excess deaths figures caused by Covid?   It's not made "the news" so it seems not to have.

How bad would the death rate have to have been, amongst the "insured" for it to really start to bite the industry.

Were there actually excess deaths overall though?  And with an average age of 82, I doubt the families of those insured would have received much money.

I don't have the figures to hand, but yes I understand that there have been excess deaths, above average.

I appreciate that most of these would not be in the "insured" category.

But if another virus came along that decimated 30-50* yr olds, I suspect insurers would start to feel the pinch pretty quickly.


* Most likely to have life insurance?

Sea_Shell

tranquility1 said:

jimjames said:

tranquility1 said:

Malthusian said:

If everyone insured by life insurance providers died, the insurers wouldn't be able to cover close to 1% of the sum they've committed to paying. That doesn't matter either and they can't even print money.

In the event of an economic meltdown nobody will care whether the FSCS can pay out enough worthless money to meet everyone's deposits or not, because the economy will have melted down.

In the event of a bog-standard collapse of a major bank, like those in 2008, either the FSCS will pay out or, as wmb194 said, it won't even get that far. The #1 priority of the government will be to ensure that depositors don't start queuing round the block en masse to withdraw their cash and stuff it under the floorboards, as that would turn a bog-standard banking crisis into economic meltdown.

Hence why owning gold is a good insurance policy.

Not really unless you have very small denominations and hold it yourself. Gold bars held elsewhere or ETF won't be much use.

I agree.  Having a few gold sovereigns stashed away is the ultimate insurance policy for a banking collapse and hyper inflation etc etc.

Ooh, we could break it down into smaller and smaller denominations and call it....money!!! 

I wonder if it'll catch on!  🤣😉

tranquility1

Sea_Shell said:

tranquility1 said:

Sea_Shell said:

Malthusian said:

If everyone insured by life insurance providers died, the insurers wouldn't be able to cover close to 1% of the sum they've committed to paying. That doesn't matter either and they can't even print money.

In the event of an economic meltdown nobody will care whether the FSCS can pay out enough worthless money to meet everyone's deposits or not, because the economy will have melted down.

In the event of a bog-standard collapse of a major bank, like those in 2008, either the FSCS will pay out or, as wmb194 said, it won't even get that far. The #1 priority of the government will be to ensure that depositors don't start queuing round the block en masse to withdraw their cash and stuff it under the floorboards, as that would turn a bog-standard banking crisis into economic meltdown.

That made me wonder if the life insurance providers have been adversely affected by the excess deaths figures caused by Covid?   It's not made "the news" so it seems not to have.

How bad would the death rate have to have been, amongst the "insured" for it to really start to bite the industry.

Were there actually excess deaths overall though?  And with an average age of 82, I doubt the families of those insured would have received much money.

I don't have the figures to hand, but yes I understand that there have been excess deaths, above average.

I appreciate that most of these would not be in the "insured" category.

But if another virus came along that decimated 30-50* yr olds, I suspect insurers would start to feel the pinch pretty quickly.


* Most likely to have life insurance?

Yes, if a virus came along which "decimated 30-50 year olds" then I expect a lot of payouts would happen.  And as that age group is the key group which looks after both older AND younger people, it would profoundly impact the entire country.

But the virus we just experienced is no such thing.  Not even elderly people were "decimated", or anything close to it.  

Sea_Shell

dunstonh said:

Sea_Shell said:

Malthusian said:

If everyone insured by life insurance providers died, the insurers wouldn't be able to cover close to 1% of the sum they've committed to paying. That doesn't matter either and they can't even print money.

In the event of an economic meltdown nobody will care whether the FSCS can pay out enough worthless money to meet everyone's deposits or not, because the economy will have melted down.

In the event of a bog-standard collapse of a major bank, like those in 2008, either the FSCS will pay out or, as wmb194 said, it won't even get that far. The #1 priority of the government will be to ensure that depositors don't start queuing round the block en masse to withdraw their cash and stuff it under the floorboards, as that would turn a bog-standard banking crisis into economic meltdown.

That made me wonder if the life insurance providers have been adversely affected by the excess deaths figures caused by Covid?   It's not made "the news" so it seems not to have.

How bad would the death rate have to have been, amongst the "insured" for it to really start to bite the industry.

Insurers have pulled out of some markets, tightened underwriting decisions and increased premiums.   Insurers play a longer game on finances compared to banks.

Is Covid vaccination status one of the required underwriting questions now?


Just out of curiosity, as I don't have or need cover.

Sea_Shell

tranquility1 said:

Sea_Shell said:

tranquility1 said:

Sea_Shell said:

Malthusian said:

If everyone insured by life insurance providers died, the insurers wouldn't be able to cover close to 1% of the sum they've committed to paying. That doesn't matter either and they can't even print money.

In the event of an economic meltdown nobody will care whether the FSCS can pay out enough worthless money to meet everyone's deposits or not, because the economy will have melted down.

In the event of a bog-standard collapse of a major bank, like those in 2008, either the FSCS will pay out or, as wmb194 said, it won't even get that far. The #1 priority of the government will be to ensure that depositors don't start queuing round the block en masse to withdraw their cash and stuff it under the floorboards, as that would turn a bog-standard banking crisis into economic meltdown.

That made me wonder if the life insurance providers have been adversely affected by the excess deaths figures caused by Covid?   It's not made "the news" so it seems not to have.

How bad would the death rate have to have been, amongst the "insured" for it to really start to bite the industry.

Were there actually excess deaths overall though?  And with an average age of 82, I doubt the families of those insured would have received much money.

I don't have the figures to hand, but yes I understand that there have been excess deaths, above average.

I appreciate that most of these would not be in the "insured" category.

But if another virus came along that decimated 30-50* yr olds, I suspect insurers would start to feel the pinch pretty quickly.


* Most likely to have life insurance?

Yes, if a virus came along which "decimated 30-50 year olds" then I expect a lot of payouts would happen.  And as that age group is the key group which looks after both older AND younger people, it would profoundly impact the entire country.

But the virus we just experienced is no such thing.  Not even elderly people were "decimated", or anything close to it.  

I agree.  In that scenario we'd be stuffed as a society, if working age people started dropping like flies.

The "pingdemic" showed us a glimpse of what could happen.

It doesn't bear thinking about if those pings were deaths (or serious illness)

Just goes to show that as bad as it's been, it could have been so much worse!

Nebulous2

tranquility1 said:

Sea_Shell said:

Malthusian said:

If everyone insured by life insurance providers died, the insurers wouldn't be able to cover close to 1% of the sum they've committed to paying. That doesn't matter either and they can't even print money.

In the event of an economic meltdown nobody will care whether the FSCS can pay out enough worthless money to meet everyone's deposits or not, because the economy will have melted down.

In the event of a bog-standard collapse of a major bank, like those in 2008, either the FSCS will pay out or, as wmb194 said, it won't even get that far. The #1 priority of the government will be to ensure that depositors don't start queuing round the block en masse to withdraw their cash and stuff it under the floorboards, as that would turn a bog-standard banking crisis into economic meltdown.

That made me wonder if the life insurance providers have been adversely affected by the excess deaths figures caused by Covid?   It's not made "the news" so it seems not to have.

How bad would the death rate have to have been, amongst the "insured" for it to really start to bite the industry.

Were there actually excess deaths overall though?  And with an average age of 82, I doubt the families of those insured would have received much money.

Yes there were excess deaths overall. The most since the war. This only gives figures until November or so and doesn't cover the further wave early this year. 

https://www.bbc.co.uk/news/uk-556316930

Edited to add - Here's the full data set for England and Wales in 2020 from the ONS 

Excess deaths in England and Wales, 2020: Final - Office for National Statistics (ons.gov.uk)

Table 3 shows age related breakdowns.  

13.1% excess deaths in 50-54 age group (1672 extra deaths) 
19.0% excess deaths in 55-59 age group (3331 extra deaths)

The average age might be 82, but it reached much further than that.