It might seem like insurance companies profit by collecting your premiums and hoping you never file a claim. That’s partly true — but the real secret is the float.
The Float Explained
- You pay premiums today.
- They pay claims years later.
- In between, they invest your money in stocks, bonds, real estate.
This investment profit often dwarfs what they earn from underwriting.
Why Denials & Delays Happen
- Tight claim scrutiny helps them protect the float.
- The longer they hold your money, the more they earn.
It’s why big insurers like Berkshire Hathaway’s Geico or Allstate have become investing powerhouses.
Bottom Line
Insurance is less about your individual policy and more about billions in premiums being invested. That’s why they can afford big stadium sponsorships — your premiums are their capital to invest long before claims are paid.
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