how insurance company makes profit
welcome to the channel don’t forget to like and subscribe today we’re going to talk about this is how insurance companies make profits insurance companies operate by taking over customer risks such as the risk of fire illness staff or even the risk of losing income due to the death of the bed winner in the family the insurance company as the insurer promises to pay a certain amount of money for the loss of certain assets belonging to the insured in the event of an accident to be able to have an insurance policy participate in insurance program customers are quoted a number of fees called premiums which are usually paid every month insurance calculations are actually quite complicated the company tries to create attractive products with relatively affordable premiums one of the benefits provided can be greater than the premium paid and lead to company losses here’s an explanation of how insurance companies make a profit and how their risk-based business can be very profitable first profits from underwriting in

insurance business activities there is what is called underwriting on the aren’t the customers selection process so the customers will be selected based on their capabilities and risk factors this is done for the first time by insurance sales adjuncts then the eligibility is determined by the estimator this process is carried out as often as as much as possible in order to attract more customers more customers means more premiums paid profits are obtained with the total funds obtained from customers are more than claims that occur in one period to ensure the company can generate underwriting profits the insurance customer selection process is carried out carefully second profits from policy cancellation insurance companies will be happy if there is an insurance account closing because it means that the risk of claims will be lost and the company can keep on the premiums that have been paid if the scheme is half investment such as unit link insurance part of the profit according to the cost collision will be paid to the customers however even though this scheme is half an investment even when the policy cancellation is complete the insurance company has actually recorded a profit another thing that can cause a policy cancellation is if the premium is not paid for a long time if so the premiums that have been paid previously will be the benefit of the insurance company third profit from no claim period when the insurance contract ends with no claim submission at all it means that the premium paid by the customer becomes the benefit of the insurance company this is normal and indeed

the purpose of insurance is to provide a sense of security security for from risk during the insurance contract fourth investment income insurance companies also make a lot of money through their investments as a service company an insurance company does not issue production capital like a vehicle manufacturer or a company based on tangible products therefore more premiums paid by customers can be invested in financial markets to increase income so the money obtained from the premium quoted from the customer can be used quite freely because the claim does not occur emitted immediately industry data from the shows there are only three claims out of every 100 insurance customers who pay regular premiums each year therefore insurance companies can be quite free to use the proceeds from the premium payments and invest it so as to increase their profit insurance companies can also lose money if their investment fail if this is the case then when the customer claims it will fail to pay a profitable insurance company is one whose underweighting is smooth meaning that the sales agent is successful in marketing insurance to the public and the number of customers with good selection criteria continues to grow second profitable insurance companies are good at managing their investments if bot processes run smoothly we can’t hope that there will be no fault on insurance claims therefore it is very important to look at the contents of the financial statements that are routinely issued by insurance companies each insurance company issues financial reports that can be downloaded currently for customers to review that is all from me thank you


Leave a Reply

Your email address will not be published. Required fields are marked *