How Insurance Companies Become Successful
Like any thriving business, in order to stay up and running you must take in more money than you spend. Its easier said than done. In the insurance industry, the money that is brought into an insurance company comes from consumers who pay monthly premiums to continue to receive the type of insurance they are requesting from the company. In return, the insurance company pays claims to damage and injury, if and when consumers file them. In order to be considered a successful insurance company, they must have more premium payments coming in than claim payments going out.
In order to ensure an insurance companies success, they hire underwriters whose job is to assess any risk brought on by new policyholders. The lower risk a client is, the more affordable it is for them to have an insurance policy and the less likely the insurance company will have to pay for a claim. A high-risk client will bring in more money from premium payments, however the chances of paying claims are higher as well. Its important for the underwriters to keep this risk balanced and offer insurance to the right consumers. And its important for consumers to know that it is their responsibility as policyholders to be aware of their coverage so if they ever need to file a claim, the process runs as smoothly as possible from both ends of the spectrum and you don't try to file things you are not even covered for.