In essence, car insurance companies are basically paid by their customers to take on the risk of a car accident, damaging, or theft because most people do not have enough funds to cover such losses (Hussain). At their source, these companies make money from premiums that they are paid by customers and from earnings from investing those premiums (Hussain). By the same token, the main way in which auto insurance companies lose money is when their customers file a claim, which is sent to that company by a customer stating that their car has been damaged and that they would like for that company to cover the damage. At the end of the day, these three aspects of car insurance companies often determine if they succeed or not. Therefore, the driving force behind the success of auto insurance companies is their risk management in those three areas: in setting premiums, paying claims, and making
In essence, car insurance companies are basically paid by their customers to take on the risk of a car accident, damaging, or theft because most people do not have enough funds to cover such losses (Hussain). At their source, these companies make money from premiums that they are paid by customers and from earnings from investing those premiums (Hussain). By the same token, the main way in which auto insurance companies lose money is when their customers file a claim, which is sent to that company by a customer stating that their car has been damaged and that they would like for that company to cover the damage. At the end of the day, these three aspects of car insurance companies often determine if they succeed or not. Therefore, the driving force behind the success of auto insurance companies is their risk management in those three areas: in setting premiums, paying claims, and making