Eli5: How does insurance work ? How is it a good deal for both the customer and the company ?
In: Economics
It’s good for the company because the company is usually correct when they calculate how much money they have to charge vs pay out.
It’s good for a customer if the customer gets compensated by insurance.
The ones that lose money are the customers that never need to make an insurance claim. I.e. the ones that paid for insurance but no event ever happened that they needed to use the insurance.
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