The primary sources of income for insurance companies are premiums and investments. Insurance Companies have investments because they receive premiums before they pay for losses and expenses.
Insurers need to generate enough revenues from premiums and investments to pay for losses, meet other expenses and earn a reasonable profit. In addition to loss payments, insurance companies incur several other types of expenses such claim settling expenses, viz., surveyors’ and investigators’ fees, marketing expenses such as providers’ commission and advertisement expenses, payment of taxes, viz., income tax, service tax and other expenses such as salaries and other overheads.
FUNDAMENTALS OF INSURANCE
