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> I’m assuming they’re charging more than they payout on average You are approaching this wrong. Yet, they charge more than they pay out, on average. But they
by smsm42 8y ago
> I’m assuming they’re charging more than they payout on average
You are approaching this wrong. Yet, they charge more than they pay out, on average. But they charge everybody, and they pay out only to small percentage of people. The point of insurance is not making profit for you, it's to cap your losses to predictable small upfront payment, instead of large ruinous random loss at random moment in the future. Yes, if you can easily afford the loss of everything in your household, then insurance makes no sense for you. But if losing significant part of it could be ruinous, by paying a small sum upfront you avoid the possibility of being ruined. The thing you are buying is limiting of the losses.
- brewdad 8y agoEven if losing everything you own wouldn't be financially ruinous, there is still value in limiting losses.
- AJ007 8y agoI know little about insurance from a professional context, but as an investor what I know is often insurance companies do not earn more than they pay out from premiums, they earn it from the float. This can persist for very long periods of time. The entire “cyber” insurance thing has seemed extremely questionable to me. Technology is changing too fast and software propagates far to quickly to meaningfully quantify risk based on anything which has happened in the past.