How insurance companies profit

The insurance industry is the only sector of the economy which makes all of its money by limiting the amount of money it loses. Understand that insurance companies generate revenue by accepting premiums from their policy holders. These companies then increase their revenues by investing the premiums in the market for an additional return.

For that reason, any personal injury or wrongful death claim paid by an insurance company (either by way of settlement or through the satisfaction of a jury verdict) will affect the overall profits of that company. Also, because insurance companies make secondary revenue by investing in the market, when the economy is in a downturn the insurance companies find themselves in a less profitable position. Accordingly, when the economy is weaker insurance premiums across the board tend to go up, insurance claims are resisted even more ferociously and cries for “tort reform” and campaigns about “too many frivolous lawsuits” get amplified and become more frequent. This “insurance cycle” resulted in the “litigation crises” of the mid-1970s, mid-1980s and today’s “crisis”. It is no coincidence the “crises” and the movements to limit individuals’ rights have all taken place simultaneously with a downturn in investment markets.

Given the insurance industry’s unique business model, it is obvious why individual insurance companies delight in collecting premiums yet vigorously resist paying legitimate claims for fair value. This also explains why insurance companies will even cheat their own insureds and fight their claims to the last. It is “just business” and the decisions of an insurance company have nothing to do with fairness regardless of what their deceivingly “caring” slogans indicate. Insurance company profits are always the motive.

The Dow Firm, P.C. battles on behalf of parties hurt by wrong-doers and we fight for our client’s personal injury and wrongful death claims.

The Dow Firm, P.C. has secured over 50 million dollars ($50,000,000) in judgments and recoveries in serious injury and wrongful death cases in a little over a decade. You can contact The Dow Firm, P.C. at (912) 264-1919 or (800) 557-JDOW or receive a free case evaluation by accessing this page and filling out the 1 minute form.