Comment by notdan

Yes this is true. They often lose money on the premiums, actually, and then make money on the float. A very simplified example: You pay $1,000 per year for 10 years on home insurance. Then a hail storm ruins your roof and it costs about $10k to replace. So they end up paying out the $10k in premium they collected over 10 years, but were able to make money on the interest they made while they held it.