Nitpick: The main job of the insurance company is to make money with the float, not to make money by denying claims. The float is premiums paid that they expect to have to pay out as claims in the future. Until the payout is made, they get to invest that money. Insurance is, in one way, a free loan to the insurance company. Insurance companies will occasionally pay out more in claims than they bring in through premiums just so they can hold the money.
For example: in Berkshire Hathaway's (they own Geico among other insurance business) 2022 activity they noted that they posted an underwriting loss of 90 million. They paid out 90 million more in claims than they collected through premiums. This is fine because their float is ~160 billion plus. When you view it this way, it means they paid 90 million for the opportunity to invest 160 billion. That is a super low interest rate.
Warren Buffet, founder of Berkshire Hathaway, has written extensively about how the insurance industry is really not profitable at all from collecting premiums, but from a high level view it is a great way to borrow massive amounts of money for almost free. The downside is that you don't know when a loan is going to get called in, and if your actuaries got the premiums right.
So really, the main job of insurance companies is to sell as many policies as possible, as close to cost as possible, and then hand the bag of money off to get reinvested. Granted, they are happy to make an underwriting profit, but the main goal is to make an investing profit off your premiums before the money is needed to pay a valid claim.
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Nitpick: The main job of the insurance company is to make money with the float, not to make money by denying claims. The float is premiums paid that they expect to have to pay out as claims in the future. Until the payout is made, they get to invest that money. Insurance is, in one way, a free loan to the insurance company. Insurance companies will occasionally pay out more in claims than they bring in through premiums just so they can hold the money.
For example: in Berkshire Hathaway's (they own Geico among other insurance business) 2022 activity they noted that they posted an underwriting loss of 90 million. They paid out 90 million more in claims than they collected through premiums. This is fine because their float is ~160 billion plus. When you view it this way, it means they paid 90 million for the opportunity to invest 160 billion. That is a super low interest rate.
Warren Buffet, founder of Berkshire Hathaway, has written extensively about how the insurance industry is really not profitable at all from collecting premiums, but from a high level view it is a great way to borrow massive amounts of money for almost free. The downside is that you don't know when a loan is going to get called in, and if your actuaries got the premiums right.
So really, the main job of insurance companies is to sell as many policies as possible, as close to cost as possible, and then hand the bag of money off to get reinvested. Granted, they are happy to make an underwriting profit, but the main goal is to make an investing profit off your premiums before the money is needed to pay a valid claim.