Chapter 22

Profiting from the Dynamics of Insurance

In This Chapter

arrow Knowing why everyone should be in the “insurance” business

arrow Understanding what you’re losing if you’re not in the insurance game

arrow Coming up with an insurance plan that increases your profitability

Everyone should be in the insurance business. If you’re like most businesspeople, you probably have a bad taste in your mouth simply at the mention of insurance, let alone at the suggestion of entering the insurance business. I’m being facetious. I don’t want you to start an insurance company. In this chapter, however, I do examine the foundation of the insurance business and show you how you can profit from borrowing some of the fundamental underpinnings of the insurance business model.

Defining Insurance

At its most basic level, insurance is nothing more than accepting risk in exchange for money. I can’t afford to write a check to rebuild my house if it’s destroyed by a tornado, so I pay an insurance company to assume the risk of the destruction a tornado may cause in exchange for an annual payment. The company assumes risk for money. Insurance is profitable. This year’s Fortune 500 boasts 35 insurance companies, accounting ...

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