Remember, insurance companies do not only make money in the arbitrage of spreading risk (which is their stated purpose). In fact, many would tell you that they make very little money selling insurance – relative to their other operations. Insurance companies are really in the game of collecting your premiums and investing those premiums in the stock market, and other investments.
If the car insurance company has a good year – making a killing after investing your insurance premium in the market – do you (the policy holder) see a difference?
Ever get a check in the mail at the end of a good year? Of course not – instead, after that good year, we all look forward to hearing from our insurance representative letting us know how much they appreciate our patronage, loyalty and that we should look forward to a reduction in premium payments for the following year. I’m a safe driver, so I always enjoy that phone call. What?…You’ve never gotten that phone call?
Instead, what we always hear is an earful about how much money auto insurance companies lose due to fraudulent claims – nowadays we’re so brainwashed that we EXPECT to hear this and automatically accept it as true – Its the fraud and frivolous litigation *forcing* your insurance company to increase their rates!