Quote:
Originally Posted by BillCNC
There is only two ways an insurance company can make money.
1). They got luck and no claims are made
2). By saying the word, No!
Regards
Bill
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No, not true. I worked for a time in the underwriting department, where past claim experience was evaluated to project future experience. Keep in mind that insurance companies are regulated by state insurance departments, and they require the companies to hold cash reserves against fluctuations to ensure their future solvency. So the combination of expected claims, reserve adjustments, state imposed taxes and other admin expenses (salaries, overhead, etc.) and a reasonable percentage for profit are the components of the rates the customers pay. Insurance companies expect to pay claims, and they expect to make profits even if claims are paid. And don't believe the politicians who claim that insurance companies are making obscene profits. They're the ones who want the gov't to take over insurance. This is a competitive business, and any company that overprices it's rates by over inflating profits will soon lose business to other companies with more competitive rates.