Insurance Companies
Posted on | April 11, 2012 | No Comments
Insurance companies profit received from investing premiums until they have to pay a claim. This money is called “float.” Underwriter can benefit or loss from price changes and also float the interest rate or dividend on the float. In the United States, loss of property and deaths recorded by insurance companies is U.S. $ 142.3 billion in the five years ending in 2003. However, total profits in the same period is U.S. $ 68.4 billion, as a result of the float.
Some people consider insurance as a form of betting which is valid for the period of the policy. Insurance companies bet that the property buyer will not be lost when buyer pay the money. Differences in costs paid to the insurance company against the amount they can receive when the accident happened almost the same as if someone bet on horse racing (for example, 10 equal 1). For this reason, several religious groups including the Amish avoid insurance and depend on the support received by their communities when disasters occur. In the community and supports the close relationship in which people can help each other to rebuild the lost property, this plan can work. Most people can not effectively support the system as above, and this system will not work for large risks.
Comments
Leave a Reply
