There is an obvious difference though. As an individual, you provide a small amount to a collective pool kept by a third-party. You can't do much with the effec

There is an obvious difference though. As an individual, you provide a small amount to a collective pool kept by a third-party. You can't do much with the effective amount, but the combined wealth of all of an insurers premiums is quite a large amount of money. As an insurer, you're essentially a deposit-only bank with some special cases that allow you to withdraw (make a claim). You have a large amount of money that you can now invest and make actually meaningful profits. What you trade for that is the assurance that should someone require a large sum of money for a loss, you will pay for it. I don't really now where people get the idea that insurance companies are just sitting on the stacks of cash they pull in from premiums. You have a minimum reserve you have to keep to assure you have enough to cover claims, just like a bank doesn't have your cash on hand all the time. (You all should watch It's a Wonderful Life sometime.) The long run expected gain from a "properly priced" insurance product is net zero (in reality its usually a loss). They make money off your money, not directly off selling insurance.