The concept of pools risk is fundamentally unsound. The insurance company has costs.

For example. Lets say we have 100 customers and an event that occurs at a rate of 1 in 10 per year. That event cost 100 dollars. Thus the total cost per year for the 100 people is 1000 dollars.

Now lets add an insurance company to the mix. They have to extract 1000 dollars per year to cover the payouts from the 100 people, so 10 dollars per person, so far. In addition they have to extract enough to pay their employees. Lets assume they have 1 employee working 1 hour a week at minimum wage. That is an additional $750 a year the insurance company has to extract. Thus the total yearly cost for this insurance is $17.50, and the total yearly profit for the insurance company is $0. Insurance, like banking is a scam, adding cost to things that should have no cost.

The ideal insurance is self insured.

The concept of pools risk is fundamentally unsound. The insurance company has costs.

For example. Lets say we have 100 customers and an event that occurs at a rate of 1 in 10 per year. That event cost 100 dollars. Thus the total cost per year for the 100 people is 1000 dollars.

Now lets add an insurance company to the mix. They have to extract 1000 dollars per year to cover the payouts from the 100 people, so 10 dollars per person, so far. In addition they have to extract enough to pay their employees. Lets assume they have 1 employee working 1 hour a week at minimum wage. That is an additional $750 a year the insurance company has to extract. Thus the total yearly cost for this insurance is $17.50, and the total yearly profit for the insurance company is $0. Insurance, like banking is a scam, adding cost to things that should have no cost.

The ideal insurance company is self insured.