How Much Money Do Insurance Companies Make?

How Much Money Do Insurance Companies Make? A Primer - Economix Blog - NYTimes.com:

In this week’s post, I shall walk the reader through the most recent income statement of WellPoint Inc.
This is an excellent overview of the income statement of a big private insurer. The conclusion? Insurance company profits are NOT a huge component of the costs - only about 4.5% of premiums paid. By contrast, the administrative and marketing costs were more significant - about 12.5% of premiums. Nevertheless, the overall 17% to profit and overhead does not seem extraordinarily high.

The author, Princeton economics professor Uwe Reinhardt, ends with a teaser for his next column suggesting that these cost and profit ratios for individually purchased health insurance policies are much worse. Stay tuned.

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