4 ms·

First. I don't know of a more consistent revenue model than something that is often automatically removed from paychecks monthly. Second, a profit margin will

First. I don't know of a more consistent revenue model than something that is often automatically removed from paychecks monthly. Second, a profit margin will take into account risk. So for the ski resort or the furniture store that includes the overhead of keeping the store open while you have no customers. Third, if the risk is so insanely high why are these firms so consistently profitable? Shouldn't we expect to see them coming in and out of existence regularly? Restaurants are a truly high risk business venture, the majority fail to exist after the first year. Perhaps they have longer runways but it's rare to hear of an insurance firm shutting its doors. The large and consistent profit seen on their end of year reports belies the risk claim.

jsmeaton 10y ago
I'm not trying to justify insurance company profits. I think it's mostly a load of crap. But the costs of a grocery store are pretty much fixed and easy to predict. The costs for an insurance company are far more complex, because they change with the number and scope of claims. I don't think you can deny there are cost risks for insurance companies that a lot of other markets don't have. However, to back you up a bit, their profits are extremely good which probably means they are largely overstating the risk in order to gouge their customers.
- ericd 10y ago
  In aggregate, over a large number of subscribers, insurance should be predictable as well.