Insurance Company & Bond Market Suggestions

[elaken]

I have played this game for a while now, and I've really enjoyed it (Good job guys!). Based on some of the recent changes, here are a couple of suggestions related to the Banking & Finance DLC:

1.
Problem: Running an insurance company, I find myself in the awkward position of having a lot of cash and only being able to invest it in equities because no bonds exist (unless I issue them from another subsidiary, and then for some reason the interest doesn't turn into investment income, so a couple things going on there). Most real insurance companies are heavily (90+) if not entirely (~100%) invested in fixed income securities. If you play a long-running insurance company in this game your net income will be extremely volatile, driven primarily by fluctuations in the equities you have to own because there is no other choice. At the moment, this is extremely unrealistic, as most real world insurance companies make their money on interest income from their fixed income portfolio.

Suggestion: There should be a "global bond market" to go along with the "global stock market." As I think about the next thing coming in the game (global broker) it's also probably worth pointing out that in the real world prime brokers make more money trading bonds than stocks (and actually make more than both of those trading derivatives, but I'll ignore that for this point). At worst, I would expect a massive amount of bonds issued by governments around the world that you can buy for minimal yields (but something is better than nothing).

2.
Problem: In the real world, Property/Casualty (i.e. a superset containing the "Home" and "Car" markets in the game, along with commercial insurance in real life) are combined about the same size as the life insurance market in terms of premium volumes. The time from premium to claim is shorter for those lines, but it's not zero (which the game currently has).

Suggestion: These lines should also generate claims that players can invest, and generally speaking should be larger - I set up an AI insurance company and ran it for 30 years in game. The premiums generated by Life were 97% of the total, and the remaining 3% was split between the other two lines, making those pretty much meaningless. I'm not sure if I'm doing something wrong here, but I can't seem to get enough premiums (i.e. customers) out of the P/C lines without blanketing the world with insurance offices. In this game I have 16mm life insurance customers and about 1mm each for car and home.

3.
Problem: Can I please not have to hold the right mouse button for 30-60 seconds to buy or issue a lot of bonds or global stocks?

Suggestion: A simple one, just step up the thresholds - if I am trying to issue a trillion dollars worth of bonds or buy a ton of stock I don't want it to take me a couple minutes to do so.

Keep up the good work!

[David]

Thanks for your suggestions. I have forwarded them to the dev team.

Please be informed that you can hold SHIFT key while clicking for 10X speed.

[David]

1.
Problem: Running an insurance company, I find myself in the awkward position of having a lot of cash and only being able to invest it in equities because no bonds exist (unless I issue them from another subsidiary, and then for some reason the interest doesn't turn into investment income, so a couple things going on there). Most real insurance companies are heavily (90+) if not entirely (~100%) invested in fixed income securities. If you play a long-running insurance company in this game your net income will be extremely volatile, driven primarily by fluctuations in the equities you have to own because there is no other choice. At the moment, this is extremely unrealistic, as most real world insurance companies make their money on interest income from their fixed income portfolio.

Suggestion: There should be a "global bond market" to go along with the "global stock market." As I think about the next thing coming in the game (global broker) it's also probably worth pointing out that in the real world prime brokers make more money trading bonds than stocks (and actually make more than both of those trading derivatives, but I'll ignore that for this point). At worst, I would expect a massive amount of bonds issued by governments around the world that you can buy for minimal yields (but something is better than nothing).

I've created a poll for a global bond market: http://www.capitalism2.com/forum/viewto ... =52&t=7341

[David]

2.
Problem: In the real world, Property/Casualty (i.e. a superset containing the "Home" and "Car" markets in the game, along with commercial insurance in real life) are combined about the same size as the life insurance market in terms of premium volumes. The time from premium to claim is shorter for those lines, but it's not zero (which the game currently has).

Suggestion: These lines should also generate claims that players can invest, and generally speaking should be larger - I set up an AI insurance company and ran it for 30 years in game. The premiums generated by Life were 97% of the total, and the remaining 3% was split between the other two lines, making those pretty much meaningless. I'm not sure if I'm doing something wrong here, but I can't seem to get enough premiums (i.e. customers) out of the P/C lines without blanketing the world with insurance offices. In this game I have 16mm life insurance customers and about 1mm each for car and home.

I've got some feedback from the dev team on this:

The market size of home insurance is determined by the population of the city.

The game currently assumes that 1) 80% of the households buy home insurance, and 2) on average each household has 3 people.

So the total number of home insurance is determined by: population / <# of people in a household> X <% of the households that buy home insurance> / 100

-------------------------------------

For car insurance, the number of car insurance is related to the number of cars in the city. And the number of cars in the city is determined by based on the real wage rate (people with higher incomes can afford to buy cars.)

The game assumes that there are 40 cars per 100 people if the real wage rate is 100, then scale it down based on the actual real wage rate .

The total number of car insurance = population * CARS_PER_100_PEOPLE / 100 * real wage rate / 100;

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All these seem pretty realistic to me. Artificially increasing the car and home insurance numbers may alter this current realistic setting.

[David]

1.
Problem: Running an insurance company, I find myself in the awkward position of having a lot of cash and only being able to invest it in equities because no bonds exist (unless I issue them from another subsidiary, and then for some reason the interest doesn't turn into investment income, so a couple things going on there). Most real insurance companies are heavily (90+) if not entirely (~100%) invested in fixed income securities. If you play a long-running insurance company in this game your net income will be extremely volatile, driven primarily by fluctuations in the equities you have to own because there is no other choice. At the moment, this is extremely unrealistic, as most real world insurance companies make their money on interest income from their fixed income portfolio.

Suggestion: There should be a "global bond market" to go along with the "global stock market." As I think about the next thing coming in the game (global broker) it's also probably worth pointing out that in the real world prime brokers make more money trading bonds than stocks (and actually make more than both of those trading derivatives, but I'll ignore that for this point). At worst, I would expect a massive amount of bonds issued by governments around the world that you can buy for minimal yields (but something is better than nothing).

I am delighted to inform you that the dev team is going to implement your suggestion, based on the poll result at http://www.capitalism2.com/forum/viewto ... =52&t=7341

[elaken]

I am delighted to inform you that the dev team is going to implement your suggestion, based on the poll result at http://www.capitalism2.com/forum/viewto ... =52&t=7341

Thanks David! Surely some tweaking will be in order, but awesome direction and I appreciate having some input.