From: Ed Green <ed_green@vnet.ibm.com> Newsgroups: rec.motorcycles Subject: Re: Helmet Laws Date: 23 Feb 1995 18:26:12 GMT Organization: ISSC Southeast Region Message-ID: <3iik04$1opk@sernews.raleigh.ibm.com> References: <regande.1.2F46728D@columbia.dsu.edu> <52.47932483.The.PressRoom@pressroom.com> <3idaac$hh8@goodnews.wv.tek.com>
Insurance companies operate on broadly-based actuarial tables that pretty well define what their claims are going to be. They can then make additional profits only by raising their rates or by reducing their claims.If insurance were their only business, this would be true. It's not; so it isn't.
Insurance companies make profits (or losses) based on how wisely they invest those $M's they collect like clockwork but only pay out in the event of actual claims.
Insurance companies make profits by purchasing legislators, who in turn pass laws mandating insurance, guaranteeing additional customers and thus additional revenues.
Insurance companies make profits by providing law enforcement organizations with radar and laser guns at no cost, so long as they write tickets. This allows the insurance companies to increase premiums on existing customers, for the same actual risk.
Insurance companies make profits by paying out claims from low- or no-interest government loans, earning profits on their existing cash reserves until such time as they repay the government. Just see how fast they try to shove money at customers when a "federal disaster area" is declared.
Most insurance companies have at least some department raking in huge profits by high-pressure telemarketing crap insurance to old people, and by selling various quasi-insurance policies to the financially illiterate.
Insurance companies make money lots of ways.
-- Ed Green DoD#0111 (919) 543-1757 ed_green@vnet.ibm.com