Does inflation and deflation of currency affect the payout?

Submitted by Quenlin on Wed, 01/09/2008 - 23:22

And the premiums as well.

What I mean is, we all know that the value of the dollar changes a little bit every now and then. Lets say that for some reason, what is $1 today is $5 tomorrow, like what happened in Germany after WW1, would insurance payouts and premiums increase to keep up with the inflation?

Posted: 09 Jan 2008 11:38 Post Subject:

good question, but I am not sure that they would follow this trend as an example. They would still pay out there normal dollar and it would just be worth more right?

Posted: 10 Jan 2008 12:22 Post Subject:

Inflation would not have a direct affect on a payout... as the payout is simply based on the loss. But of course inflation can have an affect on the amount of the loss.

It would also affect premiums, as it affects everything. Still, indirectly.

Posted: 10 Jan 2008 05:24 Post Subject: how..explained

It would also affect premiums, as it affects everything.

Yes, it would affect but not immediately. It would probably affect any of your revisions in the near future. And it would probably affect the prospective applicants for their initial costs.


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