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An insurance business has value if its cost of float over time is less than the cost the company would otherwise incur to obtain funds. But the business is a lemon if its cost of float is higher than market rates for money.. Buffett also touches on what makes valuing an insurance company difficult.nsurance Valuation Insight. A couple of key metrics can be used to value insurance companies, and these metrics happen to be common to financial firms in general. These are price to book (P/B) and return on equity (ROE).
As you understand how insurance companies use these, review your current coverage and decide if you need to make changes to your policy. Get Free Car Insurance Quotes >> Cash Value versus Replacement Value Many auto insurance policies use cash value as the payout factor for repairs or replacement. Cash value is not the same as replacement value and it is important to understand the difference. Cash value is based upon the actual value of the car at the time of the repair or replacement. In order to determine this amount, car insurance companies have databases of information on all of the various cars on the road today. The database has information about the make and model of the car, original purchase price, average mileage, and wear and tear. All of these factors determine the depreciated value of the car. This is what the actual cash value of the car is for the insurance company ...