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Insurance companies operate at about 17% over premiums. Which means, for every dollar someone spends on insurance the company pays $0.83 in claims. This happe
by after_care 5y ago
Insurance companies operate at about 17% over premiums. Which means, for every dollar someone spends on insurance the company pays $0.83 in claims. This happens at a population level. Maybe you individually have a statistically above average amount of claims and collected more money than you spent. In which case congratulations. Maybe you are in a subpopulation (5x Miele owners) that the company is not accurately accounting for in their actuary tables. In which case the more this subpopulation signs up for insurance the higher premiums will increase, and perhaps if large enough the actuaries will catch on and raise your premiums as a subgroup.
Either way, the insurance company will turn a profit from premiums. I'm glad this policy has paid off for you, but "reducing costs" is not a good reason to purchase insurance. Insurance reduces risk and makes expenses more predictable.
- deleted 5y ago[deleted]
- rdtwo 5y agoThe math isn’t as simple as you make it out to be. See insurance companies have volume and can negotiate better rates and policies. For example they can get 30-50%labor rate discounts or negotiate lower costs for recurring visits and discounted parts costs. As such is perfectly possible for insurance to be cheaper than uninsured services.
- _carbyau_ 5y agoIn which case it is less about being insurance and more about being an appliance servicing company - even if the work is outsourced. Put the two together - insurance and appliance servicing company = your described scenario.
- rdtwo 5y agoExactly a lot of These companies are like hmos of appliances. Health insurance in the us isn’t really insurance either. If it was pure insurance most people would only by catastrophic