Are car insurance companies making tons of money during the COVID-19 pandemic?
Lots of people aren't working due to COVID-19. With less people on the road, there are obviously fewer accidents and claims. Are insurance companies recording record profits during the pandemic?
Answer provided by
Answered on Apr 23, 2021
“Although insurance companies are paying out about 20% less in car insurance claims, they aren’t making tons of profit due to COVID-19.
What you’re missing is that many people are reducing their coverage to liability only, or even selling their car if money is tight. In addition, the stock market crash at the onset of the pandemic drastically affected the companies’ profit margins.
Many insurance companies make a bulk of their profit by putting premiums into the market to generate a return. When the market crashed in March 2020, it took a lot of those profits with it.
So to answer your question, some insurance companies might have positioned themselves to “weather the storm” with cash on hand and other assets, while others are probably taking on more debt just to survive.”
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