Originally Posted by Ceeker
Ins companies are in bed with the gov't.
Originally Posted by Blades
lets say everyone gets into one accident in there lives .. I pay $130 per month which ends up being $15,600 in a total of 10 years. I had an accident with my 330xi back in 2004 that cost that much to fix. How much did the insurance make off me really? what about people that sue or get paid out for there whole car?
That's assuming that they take your money and stuff it in a mattress. They take that money and invest it. And you can be sure that they always make money on their portfolio. Depending on claims and losses they don't necessarily net a profit at the end of the day (as hockeyfan pointed out with those stats) but their investment portfolio has never shown a loss, and here's why...
Going back to what Ceeker said, the reason why the insurance companies are in bed with the government is because of the type of investments that they buy....
...can you guess it?
Government bonds! The majority of the investments that insurance companies will buy with what's left over of your premium (after covering claims, operational costs, reserves, etc...) are government bonds because are essentially guaranteed, no risk investments. So when insurance companies increase your premium that premium increase goes straight to the government in the form of purchased government bonds and depending on how the year was for claims and losses the profit from the investments goes to the insurance companies (shareholders).
Don't expect premiums to decrease any time soon.