Is the insurance industry just legalized gambling?

It could be said that insurance is legalized gambling in the sense that it is calculated risk taking. The insurance company is taking a risk that your medical, home, auto and other costs will be less than the amount you pay into your policy in deductibles and premiums. If they think you will incur less in costs, you will pay less in premiums.

If they think you will incur more in costs, you will pay more in premiums or possibly be denied coverage. To determine how risky insuring you will be, the insurance company’s underwriters perform a survey or surveys on you to see how many (statistically) high-risk conditions and characteristics you have. From Wikipedia.com -quote In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.

-endquote I found a discussion about how much an insured person pays in premiums compared to how often and how much money they put claims in for here: http://www.financialcrisis2009.org/forum1/Insurance/How-does-insurance-work-Any-kind-Is-it-really-worth-paying-out-of-pocket-or-get-insured-23417.htm The odds are always stacked in the house’s favor in the insurance business. If they weren’t, the insurance company would eventually go out of business. It could be said that insurance is legalized gambling in the sense that it is calculated risk taking.

The insurance company is taking a risk that your medical, home, auto and other costs will be less than the amount you pay into your policy in deductibles and premiums. If they think you will incur less in costs, you will pay less in premiums. If they think you will incur more in costs, you will pay more in premiums or possibly be denied coverage.

To determine how risky insuring you will be, the insurance company’s underwriters perform a survey or surveys on you to see how many (statistically) high-risk conditions and characteristics you have. In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. The odds are always stacked in the house’s favor in the insurance business.

If they weren’t, the insurance company would eventually go out of business.