I’ve always wondered how do insurance companies make money.
Do insurance companies earn more from premiums or investments?
How do they stay profitable while paying claims?
Insurers earn profits by raking in premiums, investing them, taking calculated risks, and processing fewer claims than the total premiums collected, thereby pocketing the entire profit.
Insurance companies make money by collecting premiums from customers and investing that money, paying out only a portion as claims while keeping the rest as profit.
Insurance companies make money primarily by collecting more in premiums than they pay out in claims. They invest these premiums in stocks, bonds, and other assets, earning additional income. Efficient risk assessment and cost management also boost their profitability.
