Another aspect is that insurance companies can make money on the float, and this can potentially let them be profitable while paying out more in claims than the

Another aspect is that insurance companies can make money on the float, and this can potentially let them be profitable while paying out more in claims than they take in (or at least netting out to paying out what they take in). That’s assuming that they can effectively invest the premiums. Buffett successfully applied this strategy with geico.