FACT: Of every dollar insurance companies collect in premiums, 60 cents goes back to policyholders to pay claims, 18 cents goes to pay operating expenses and 16 cents goes back into communities in the form of taxes. Insurers keep 6 cents as profit.
From 2000 to 2004, the insurance industry’s earnings were substantially lower than the earnings of the rest of the financial sector. In 2002, the industry's earnings were at an all-time low. That year, investors got an average return of 1.7% on their money, which is unacceptably low for any business. Imagine if you bought shares in a company, a risky proposition at the best of times, and you got a smaller return on your investment than you could have gotten from a bank savings account.
In 2004 and 2005, financial results were generally much better, and car insurers reduced premiums in every jurisdiction where there was a privately run, competitive insurance system.
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