The way insurance works is to spread the losses of the few amongst the many. Contrary to what most people think the insurers don't earn a profit by simply collecting premiums and people not claiming (that can account for some profit, but that is part of the complete picture). In reality a lot of their money is earned by getting paid today and using that money for years until a claim takes place. Statistically things are all calculated and with the law of large numbers they have a pretty accurate idea of how many claims to expect at what frequency.
Anyway, just thought some people might be interested to know that...even if it's a little off topic.
|