[UPDATED] Playtime over for You Play or We Pay

Reader Comments (Page 1 of 1)

4-16-2009 @ 5:55PM

Chromin said...

'Caz said...

...and premiums would have to exceed claims made by subscribers in order to keep the business afloat. '

FYI - Insurance companies do not actually work like this. The premiums that you pay UP FRONT are directed into investments that the insurance companies get the profit from. Essentially, you are loaning them money, interest free. (Not always - there are some types of insurance, say certain types of Life Insurance, where you can earn dividends.)

Not that I mean to go into a whole lesson on this, but I just wanted to point out that income from INSURANCE PAYMENTS does not have to exceed what they are paying out. Actuaries (VERY PROFITABLE career, btw, but I've heard can be very boring, and requires studying a lot of math and statistics) work very hard to keep insurance companies profitable and competitive.

OK...lesson over! :P

4-16-2009 @ 6:08PM

Hoggersbud said...

Indeed, the average insurance company isn't just sitting on the money coming in, but actively seeking to find ways to make profits on it, so when things go bad, they can pay for it.

Of course, when their investments fail, or when they have to pay more than they expected, well, they have problems.

Add your comments

Your comments:

Remember me

E-Mail me when someone replies to this comment

Please keep your comments relevant to this blog entry. Email addresses are never displayed, but they are required to confirm your comments.

When you enter your name and email address, you'll be sent a link to confirm your comment, and a password. To leave another comment, just use that password.

To create a live link, simply type the URL (including http://) or email address and we will make it a live link for you. You can put up to 3 URLs in your comments. Line breaks and paragraphs are automatically converted — no need to use <p> or <br /> tags.