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But the insurance companies still don't get to pocket that money if the costs are increased, how does it incentivize them?
by chrischen 7y ago
But the insurance companies still don't get to pocket that money if the costs are increased, how does it incentivize them?
- lasdfas 7y agoIt's normally not a fixed amount. It's generally a percentage above costs. If all costs increase, they increase their revenue. They get the same percentage of a bigger pie.
- freepor 7y agoBasically, if an industry is limited to “cost plus” profits (eg 5% of payouts) their incentive is to drive payouts as high as possible.