Actually, insurance premiums are designed to pay 100% of the losses the actuaries predict will occur over a large pool of people. There is a number commonly dis

Actually, insurance premiums are designed to pay 100% of the losses the actuaries predict will occur over a large pool of people. There is a number commonly discussed by insurance companies called the "loss ratio." A loss ratio of 93% (i.e., $93 paid in claims for every $100 collected in premiums) for a year is very good. On the other hand, a loss ratio of 105% or even 110% in a year is not good, but not unheard of. Insurers make their money on investments of premium dollars, not on loss ratios. Sure, they might have a good year or two with low loss ratios, but that means they're collecting too much premium compared to competitors and so may lose market share if the others lower premiums due to more accurate forecasts of losses (closer to 100%). This is one reason insurance marketing and advertising work so hard to drive customer loyalty and retention. So your rates went up even though you didn't have an accident? Better look to see what the stock market has been doing lately.