Insurance pools small premiums from many people to pay big claims for the few who suffer losses.
Expected payout per dollar of premium is always less than 1 — that's how insurers stay in business. You're paying for risk transfer, not expected gain.
Insurance pools small premiums from many people to pay big claims for the few who suffer losses.
Expected payout per dollar of premium is always less than 1 — that's how insurers stay in business. You're paying for risk transfer, not expected gain.