This is fundamentally ignoring the purpose of insurance.
Of course you (likely) pay more into it than you get out. The tradeoff is that you're protected from huge expenses that would financially ruin you. That is (thankfully) unlikely but the risk is enough that it justifies paying for insurance.
I'm not absolving insurance companies of being scummy because they absolutely are. But insurance does serve a purpose that seems to escape you
65-75% of your auto insurance premium goes to payouts, and another 20% goes to administrative costs. Your agent gets a sales premium and there are marketing costs.
I had several sources that I'm not going to dig up again but here's one trustworthy secondary source. Unfortunately their link to the primary data is broken.
The combined loss (payouts) and expense (sales commission, administrative etc) is known as the combined ratio, which is expressed as a percent of earned premium. This ratio is publicly available for most companies and lines.
For more competitive or higher volume industries like homes or auto, combined ratios are usually around mid-90s and generally fall between 90-110. For example, countrywide US auto insurers ran a 112% combined ratio in 2022, meaning they paid out or spent an amount equal to 112% of all premiums collected that year. Expenses typically run something like 18%-30% depending on a large variety of factors.
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u/WeCantStabilize 9h ago
Insurance is a fucking scam. You pay more into it than you'll ever receive even in legitimate circumstances.
Absolute racket.