How insurance companies make their money
Insurance companies make money by selling policies to their customers, a new study finds.
The study by PricewaterhouseCoopers (PwC) found that insurers have been losing money since the financial crisis, with the average loss of about 1% a year.
In 2017, insurers made losses of more than $5.5bn.
However, they have made more than twice as much since 2014, and have more than tripled the average profit over the past four years.
“Insurance is the lifeblood of our economy,” said Paul J. Devereaux, PwC vice president of industry analysis and consulting.
“It’s important for the economy to stay strong, and for the insurance industry to remain competitive.”
The insurance industry accounts for nearly half of all business activity in the US.
Insurers make up a large proportion of the industry, with about 10% of the US workforce.
Some companies that have faced the downturn include:UnitedHealth Group, Anthem Blue Cross, Blue Shield, Wellpoint and Humana.
But the biggest threat to the insurance market has come from the rise of ‘market failure’ or low-cost insurers.
As the US healthcare system has struggled to recover from the crisis, the number of insurers has risen sharply.
At the end of 2018, there were more than 7,300 insurance companies in the United States, up from about 6,500 in 2016.