Insurence
There is a delicate balance to the system insurence companys work within. They collect premiums, invest those premiums and payout on claims with those premiums. No matter when you have a claim, your insurance company must have the money available to pay on that claim. Your insurence company cannot just pay for claims when the stock market is up – no they have to be ready to pay out at any time. Insurence company’s have to make sure that their investments grow so that they have enough money for you when you have a claim.
Insurence company’s have to make sure they collect enough premiums so that they stay profitable. If your insurence company becomes unprofitable then they may not be in business when you do have a claim.
In addition to economic conditions, when reviewing premiums, insurence company’s have to also consider weather losses and catastrophic losses – which they nor the policyholder have any control over – but these losses still increase claim activity, and can have an effect on premiums.
Related Posts:
