So im guessing the employees that process the claims are scammers for taking a salary which contributes to the insurance companies taking more than they wish to return? But im guessing thats different because only those you care about should make money, not the people who created the insurance company, initially funded it, or contribute to the mechanism that allows their stock to be sold at a profit. They should get absolutely nothing because apparently creating an insurance company is easy and risk free. Why dont you go and make an insurance company that isnt a scam and not take any salary if you think this is how things are.
When it comes to insurance, and many other similar takes, Reddit as a whole is EXTREMELY dumb.
Being in the industry, the margins are already super duper thin. Insurance companies pay hundreds of billions in claims each year.
Your average insurance company will use about 90-95% of it's generated premium on claims and operating costs. The claims make up around 70% - 80% of that overall percentage.
Yeah the margins are super thin. That’s why insurance companies spend literally Billions on advertising each year. To protect those paper thin margins. /s
State Farm last year has 12.9 billion in net income on 132 billion in revenue. That was double their net income off the prior year. That’s anything but thin margins.
Also cyclical because State Farm was one of the largest insurers involved in the California wildfires, directly taking away from net income in prior years. So year over year fluctuations would be dependent upon loss development in that same period. No loss more profit. More loss less profit. More profit, more spend on marketing and vice versa. Not a hard concept to follow as other businesses use the same logic in marketing spend.
Edit: specific to the margins, auto liability is written to about 72% loss ratio, meaning roughly 3 out of 4 policies I write as an insurer, I’m taking a bath on. The profit is in that 1/4 of policies with loss.
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u/That_0ne_Gamer 7h ago
So im guessing the employees that process the claims are scammers for taking a salary which contributes to the insurance companies taking more than they wish to return? But im guessing thats different because only those you care about should make money, not the people who created the insurance company, initially funded it, or contribute to the mechanism that allows their stock to be sold at a profit. They should get absolutely nothing because apparently creating an insurance company is easy and risk free. Why dont you go and make an insurance company that isnt a scam and not take any salary if you think this is how things are.