General insurance What are the ways insurance companies drive income to cover up expenses?

[sincerem]

How do insurance generate their own revenue to outsource their own expenditures and drive profit as well?

Since we know insurers come into insurance to register via any premium policy plan in order to recoup gain, more than they've invested. You should ask yourself, how do insurance cover up all this bills of insurers and drive their own profit to keep their company afloat for many years?


Here are some of the ways insurance drives money to take care of their own expenditures with reserve as profit.

* Insurance make money by charging premium services from insurers in exchange for the premium insurance coverage,

* Then reinvesting those funds to their private businesses, Interest generating investments like loaning funds to customers, buying of stocks and xD. They try to manage administrative expenses to minimize total cost they spend on premiums in order to run for long time.

What other means does insurance utilize to generate their own revenue to care for their bills and make profit for themselves?

 

[Good luck]

Insurance company get their money or income through what customers pay every month or yearly to their company which is their policy and when the needs arises they will also use it to sort the problem,l think this is the major way of generating income to their insurance company and they can also generate money through the numbers of people they have in their system

 

[btaliat]

Though major ways by which insurance companies get their money still remains through premium. But this is not the only way they can get their money. Other means they can get their money is though the money they may get through insured who find wanting of one breach or the other.

 

[uforwealth]

Investment is another way through which
insurance companies make money .
When their customers pay their monthly
premium,they invest it in profitable business that can generate them a lot of money .

Insurance companies also generate income from cash value cancellation. If the premium paid by life insurance customer is invested, when the customer
closes the account, all liabilities are gone and the customer will only be paid from the interest generated.

 

[btaliat]

It may not even be surprising to conclude that most insurance companies as well insure their companies against any loss. They also make money through this. And most time, there is much gain for them expecially through premium because most of the time, insured pay premium which they may not get compensation for.

 

[sincerem]

Insurance company get their money or income through what customers pay every month or yearly to their company which is their policy and when the needs arises they will also use it to sort the problem,l think this is the major way of generating income to their insurance company and they can also generate money through the numbers of people they have in their system

Yes, the more the insurers comes in the more money insurance companies generates. And again we shouldn't forget that not all the insurers comes to benefit from their policy plan even if they've received the coverage with the insurance company. So with the money recoup from those insurers it will also go a long way to settling their debts and making profits too.

 

[Good luck]

Yes,i am even thinking that how will it be possible for the insurance company to get the money they will use to fix an expensive car that has an insurance and got damaged within three months of insuring it? Because the owner of the car may not even have paid up to 5% of what will required to repair or fixed the damage.

 

[sincerem]

Yes,i am even thinking that how will it be possible for the insurance company to get the money they will use to fix an expensive car that has an insurance and got damaged within three months of insuring it? Because the owner of the car may not even have paid up to 5% of what will required to repair or fixed the damage.

That's same thing why this thread was made to solve. Insurance company insure this cars having that mindset that not all cars will be damaged at such an extent that requires them spending more. With Insurance coverage they're protected and the funds they paid to insurance companies will be utilized well for other investment to build more financial stability for the insurance company to take care of every bill.

 

[Mika]

The premiums collected by selling insurance policies is a small amount compared to the coverage provided by the insurance policy. The premiums are barely enough to provide coverage. Therefore, the insurance companies invest money on various projects. They buy shares in various sectors to earn profits which they use to provide coverage.

 

[Wisdom01]

I think the method they make use of is through the use of shares and insurance premium , most shareholders actually invest in the insurance company and this would make them have the funds to be able to pay and cover any kind of risk attached I think , this is the method

 

[sincerem]

The premiums collected by selling insurance policies is a small amount compared to the coverage provided by the insurance policy. The premiums are barely enough to provide coverage. Therefore, the insurance companies invest money on various projects. They buy shares in various sectors to earn profits which they use to provide coverage.

Yes, I understand that the premium policy already can go far when it comes to settling all insurance policy plans that they offered to the insurers. Buying shares and investing on their own personal business is an option for the Insurance company to drive profit and cover up for every expenses and make gain as well.

 

[Setho]

Insurance companies do not really have to invest the money that is under their custody. They can engage in things like institutional lending in order to get extra money but then insurance is just like a way of circulating money within people. They just use the money gotten from other people in order to fund an emergency and then so on and so forth.

 

[Alexandoy]

The insurance works on the actuarial system. It is a formula or computation that the odds are in favor of the company. The collected premium payments are invested in bonds and other negotiable instruments. That is why usually the insurance company is an affiliate of a commercial bank because their business is directly connected with each other.

 

[sincerem]

Insurance companies do not really have to invest the money that is under their custody. They can engage in things like institutional lending in order to get extra money but then insurance is just like a way of circulating money within people. They just use the money gotten from other people in order to fund an emergency and then so on and so forth.

The money you said they offer to institutions is part of the investment dear. If they don't give out, how can they get interest for the money they're holding. Remember, any thing that you put your finance on, and it brings interest is called investment. The interest you got is the investment profit. So they have many ways of generating funds.