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How does the insurer profit more if the risk is higher? Higher risk means there is a much better chance that an insurance policy will pay out, the ideal for an
by zrobotics 7y ago
How does the insurer profit more if the risk is higher? Higher risk means there is a much better chance that an insurance policy will pay out, the ideal for an insurance policy is a low risk of having to pay on the policy.
- kurthr 7y agoBecause insurance prices are higher, and they make a percentage of the total payouts. All the insurers make the same actuarial calculations so there's no significant difference in pricing between them. All the banks pay the same insurance price and pass it on, because none of them care about security of your goods or information (according to the parent).
- zrobotics 7y agoInteresting; I could never stomach actuarial textbooks well enough to gain much more than a high-level view of this industry. So higher-price policies are higher profit? I had always assumed the higher prices reflected the higher risk to the insurer, and even in a competitive market I would assume that the profit margin per policy would be roughly comparable between different types of policies.