An insurance company refers to a company as a legal person established in accordance with the Insurance Law and the Company Law. Insurance companies collect premiums, invest the premium capital in bonds, stocks, loans and other assets, and use the income of these assets to pay the insurance compensation determined in the policy. Through the above business, insurance companies can get high return on investment, provide customers with appropriate insurance services at lower premiums, and make profits.
2. The business of insurance companies is divided into two categories: (1) personal insurance business, including life insurance, health insurance, accident insurance and other insurance businesses. (2) Property insurance business, including property loss insurance, liability insurance, credit insurance, guarantee insurance and other insurance business. Insurance companies in China are generally not allowed to operate life insurance business and property insurance business at the same time.
Three: A customer pays the insurance premium one or more times in a certain period of time, and the insurance company collects a large number of insurance premiums paid by customers. In the event of an insurance accident, the insurance company will pay the agreed compensation. If the indemnity expenditure of the insurance company is always less than the premium income, the difference will become the "underwriting profit" of the insurance company.
Four: For some policyholders, the insurance premium they get because of the insurance accident is much higher than the insurance premium they pay, while others may not get compensation at all because there is no insurance accident during the whole insurance period. In a word, the total amount paid by insurance companies is less than the premium income they get. The difference between these two forms is cost and profit.
Five: From the time when the insurance company receives the insurance money to the time when the insurance company pays the indemnity, the insurance company can invest the insurance funds to earn income. The return on investment is an important source of profits for insurance companies. It can be said that for most insurance companies, the return on investment is the only source of profit.
Making money through underwriting is very rare in the insurance industry of most countries. In the United States, the insurance business of property insurance companies lost 2.3 billion yuan in the five years before 2003, but the total profit during this period was 400 million yuan, which was due to the investment income. Some people in the insurance industry pointed out that insurance companies cannot always rely on investment income instead of insurance business income.