Is it true that claims paid by the insurance companies often amount to 70% of premiums collected?
maybe..that still leaves 30% profit. And folks think big oil rips off people..lol
Yes.
They wouldn't be in business very long if they did not make a decent profit.
Answers:
Depends on the line of business. Most of the time, for homeowners and auto, you're damn lucky if it's 95%. "Good" results are under 110%.
Workers comp is usually over 100%, also. Commercial property has to run around 60% to make up for commercial general liability, which is usually well over 100%.
The only line of business which is consistantly profitable is bonds, where you can expect claims to be under 25%, or you fire your underwriters for not doing a good job.
Insurance companies don't make their money off the premiums - they make their money off the investments of the reserve monies.
Combined ratio can be anywhere from .90 up to 1.20.
Insurance rarely makes underwriting profits these days.the market is simply too soft.