How does an insurance company make money?
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The Secret: Besides premiums minus claims, how do insurers earn?
Investing the 'float' of premiums before claims are paid. Premiums arrive before claims go out. Warren Buffett built Berkshire Hathaway around investing that float. Source: Berkshire Hathaway shareholder letters (on float)
Why They Stay: Why do policyholders auto-renew without shopping?
Inertia: shopping is a chore and renewal is automatic. Insurers know loyal customers rarely compare. The UK regulator banned charging renewing customers more than new ones because of this 'loyalty penalty'. Source: UK FCA – general insurance pricing practices
Why They Leave: What makes people finally switch?
A big premium jump at renewal. Renewal-notice sticker shock is the trigger, which is why comparison sites advertise heavily around renewal season. Source: NAIC – Shopping for auto insurance