I worked in the insurance industry for 16 years and saw first hand how profitable an insurance company can be. I will not attempt to go into the nitty gritty details but I will give you a pretty good idea in the form of an overview, how profitable a venture an insurance company can be.
Insurance is a form of risk management. It is purchased to avoid the possibility of a large , potential future loss. To compensate the insurance company for taking on this potential future payout, the insured pays the insurance company a certain sum of money known as the premium. In return for the payment of the premium the insured receives a written document, known as the insurance policy, that lays out what events are being insured and what the payment to the policyholder would be if that event actually occurred.
The insurance company collects the premiums of a large group of insureds to cover the few losses they would have to pay out for.They use historical data to figure the probability of losses and then charge premiums to cover them while building in a profit for themselves.
For example,let’s say there were 100 houses each worth $100,000 in a particular area. ...
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