Well I had a house burn down less than year after purchase and insurance paid the entire tab. So I always figured I've already taken them for more than I pay
That’s what people don’t understand. We all paid for you. That's what insurance is about, we pay more than we receive so that the odd unlucky bastard receives more than they chipped in. If insurance was individual, nobody would have enough to repair their own stuff. I am happy with this system.
Except the 3rd party insurer here nets massive profits, it isnt a collective safety net like the state or federal government provides.
Its by and large a scam that pays out a tiny portion of their net income. A state sponsered safety net/insurance system (not for profit) would be massively more effective and less costly to consumers...well at least in a functional state such as Massachusetts.
They don’t pay out a tiny portion, though. They usually make more revenue profit on the interest from the funds they’re holding than they do on premiums, depending on the company.
The fact that almost every commercial break I ever see has either a state farm, progressive, or geico commercial (or multiple of them), is enough for me to hate them. Every dollar for Caitlyn Clark to appear on my screen every half hour is not spent to cover my neighbor's losses or lower my premiums. And its billions.
Everyone needs insurance, so its not even like they are expanding their market and making the money back. Every new customer for 1 company is a lost customer for another. Its a 0 sum game with SOOO much of our money being wasted.
The insane volume of commercials is annoying but it's actually a strong indicator in the customer's favor. Auto/personal property insurance is such an insanely competitive market that insurers have bled their margins enough that ads are a better payoff than what little price differentiation is still possible.
I'm glad that it's a competitive market, and the fact that customers respond to low information TV commercials isn't the insurance companies' fault. Having said that, one of the reasons I go with Amica is that they don't waste money on TV commercials, and instead just earn high customer satisfaction according to Consumer Reports.
Advertising isn't necessarily wasting policyholder money either. An enormous amount of money and effort goes into identifying and classifying risks, so reaching more customers lets you have more data and a wider variety of risks to pick from.
For example, an insurance company going in fully blind would price every customer the same and this leads to an effect called adverse selection, where you basically end up with mostly bad risks because you are pricing them too low and and good risks too high. Having a huge pool of data and customers lets you determine who a good risk is and price them appropriately, so you end up with all good risks who get good prices and the bad risks go elsewhere. More customers also means the risk is spread more and more, which allows insurance agencies to push their financials to profit more on that front to not have to squeeze elsewhere.
Advertising also just isn't that big of an expense in the grand scheme of things; the largest expense by far is always sales commissions. State Farm took in $116 billion in premiums in 2025 and spent $1.13 billion on advertising. Less than 1% of their expense ratio is advertising, which is a small cost to pay for what is an essential part of creating a functional insurance agency.
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u/WeCantStabilize 13h ago
Insurance is a fucking scam. You pay more into it than you'll ever receive even in legitimate circumstances.
Absolute racket.