Quote:
Originally Posted by cfos
I agree with the first statement, not the rest. If you were following along, the people involved are high school students, yes? If the pay out is the $8-10k Jake (plus whatever the other side may be) is suggesting... I'd argue I do have an idea of whether the insurance company lost out. Assuming the kid is 16-18 years old, he couldn't have been driving for more than what? 3 years? You think this kid paid $8-10k+ in premiums over >3 years?
My guess is the kid was a part of the parent's policy and thus, insured for less as a result of a family plan. Even so, if the kid paid for his own policy, I seriously doubt he was paying in a like amount to what is being paid out, in total. Just think about it and revisit your statement.  |
I don't think you really understand how insurance works... See thstone's very simple and accurate explanation.
To put a finer point on it: Insurance companies don't price individual policies to be profitable. They price the that particular risk group to profitable.
In simply terms the concept is this - if underwriting shows a $20,000 payout for every 50 teenage drivers annually, they build a policy based on that info that will generate enough revenue from the insured drivers in that risk pull to cover the planned costs (based on stats) plus a number of other multipliers plus the company's administrative costs, plus a margin.
So if on average the payout $20K annually for every 50 insured and the average premium for this group is $1600; the company has $80K in revenue for every $20K it pays out.
I've completely made up these numbers, but the concept stands true.
Car insurance companies don't ever really loose, the just win by a lesser margin some years. They would not be going concerns for very long if they weren't underwriting policies that made sense...
It's not winners and losers, it's a number's game. Jake is a line item, it's not personal. A decent adjuster will not be taken advantage of, and it's Jake's responsibility to be his own advocate (the adjuster likely won't). It's not being greedy, it's being prudent.