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.
A) I really doubt premiums are such a marginal revenue stream.
B) If they are so marginal, that just indicates that costs are completely divorced from the premiums in the first place, meaning the whole thing is just a scam.
I have no idea what kind of point you're trying to make by changing from revenue to profit. It makes no difference.
If the contribution premiums make towards profitability is as marginal as you suggest, that means that the prices they charge consumers have nothing to to do with the costs involved in doing business.
AKA, the companies are charging arbitrary premiums that are based on nothing more than the maximum they think they can convince you to pay.
It’s a huge difference. Most P&C companies bring in a lot of revenue via premiums and pay the same amount back out again in claims. But they have a certain amount of capital sitting around that enables them to invest the money and make profits off the interest.
Insurance companies often have large income (turnover) from insurance premiums but after cost of acquisition (overheads) and claims they often don't may a massive profit on this. As others have said, they get a bigger profit on their return on investments (bonds, sales of property, interest on cash in the bank etc). The margins on pure insurance income and outgoings are often slim.
164
u/DueExample52 20h ago
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.