The value of the premiums the company takes in is higher than the value of the payouts it makes.
An insurance company is a business that provides coverage, in the form of compensation resulting from loss, damages, injury, treatment or hardship in exchange for premium payments.
Insurance companies make profits by setting premium levels that are higher than necessary. Insurance companies make profit from short-term investment of the premium money they gain as premiums. However, the payout of services is received several months later.
