> No, their job is to accurately calculate the expected value of the losses, then collect a premium slightly higher than the expected value, turning an unpredictable, potentially high loss into a predictable small one. Reverse gambling, basically.
No, premiums don't need to cover payouts. You have to pay the premiums before you get any payouts, so the company invests them and makes money that way.
No, premiums don't need to cover payouts. You have to pay the premiums before you get any payouts, so the company invests them and makes money that way.