How do insurance companies make money?

[Etini Willie]

I worked in an office of an insurance company. I have to say I was amazed at the setting of it. The aesthetics were well laid out and radiant with the class of modern decor. The insurance company had a considerable number of staff and on further investigation, I found out that the staff was well paid. This got me wondering how insurance companies make money. How are they able to pay a number of staff working for them and even pay them well? Let's delve into the matter

1) From Premiums: Their basic operation involves receiving premiums from policyholders as risk management fees. Premiums are paid monthly and they pull l these funds to accrue into a large sum of money. The amount they use to settle claims might just be a fraction of funds pooled from premiums. Even if claims are high, they are not expected to be so every month.

2) Investing of pooled funds: Insurance companies identify and invest in businesses that are sure of yielding profits. By so doing, they tend to multiply the funds.

These are the avenues that insurance companies are able to get money to run their businesses and pay their staff comfortably.

 

[Bisolami]

I worked in an office of an insurance company. I have to say I was amazed at the setting of it. The aesthetics were well laid out and radiant with the class of modern decor. The insurance company had a considerable number of staff and on further investigation, I found out that the staff was well paid. This got me wondering how insurance companies make money. How are they able to pay a number of staff working for them and even pay them well? Let's delve into the matter

1) From Premiums: Their basic operation involves receiving premiums from policyholders as risk management fees. Premiums are paid monthly and they pull l these funds to accrue into a large sum of money. The amount they use to settle claims might just be a fraction of funds pooled from premiums. Even if claims are high, they are not expected to be so every month.

2) Investing of pooled funds: Insurance companies identify and invest in businesses that are sure of yielding profits. By so doing, they tend to multiply the funds.

These are the avenues that insurance companies are able to get money to run their businesses and pay their staff comfortably.

There was a time I made a research on how insurance companies make their money and how they pay salaries to their workers and I realized that they make money from the premiums that their client paid to them.

Well, this is my first time hearing that they invest some of the premiums of their clients and I think it is a very good way to generate money for their insurance company. I am very sure that insurance companies will know legit companies that they can invest their money in so that they will not lose their money but sometimes they always lose too so they should be very careful