Many potential insurance consumers who are interested in buying insurance will find that insurance products from different companies seem to have almost the same coverage and liability, but because they come from different companies, they have different pricing, and not only that, the prices are vastly different. At this point, many people who want to buy insurance wonder: do the different prices mean that the quality is different? Or is it that the company with the higher price wants to make more profit?Today's article will explain to you what causes different insurance companies to sell products at different prices.
When it comes to the pricing of insurance products, we first need to talk about the composition of the cost of insurance. Generally speaking, the premium we pay for an insurance policy consists of two main components: pure premiums and additional premiums. Pure premiums include risk premiums (the cost of paying claims) and savings premiums (the cost of investing to generate benefits). Additional premiums include channel fees (e.g. commissions from banks, telephone, agents, etc.), and some operating costs such as advertising, staff salaries, space rental, etc. Finally, the company needs to keep its profit, which is the retained profit. There are hundreds of insurance companies in the United States, and each insurance company has a very different time frame, staffing structure, and marketing strategy, so it is because of the different strategies of different insurance companies that they have very different insurance pricing. Operating costs vary from one insurance company to another, after all, operating costs are a high expense for a company, from a dozen employees to the salaries of hundreds of employees, which account for most of the operating costs.
In addition, there are also the rent for the insurance company's office and event venue, as well as the telephone cost for customer service staff to answer the phone, and even some printing and delivery fees, etc. These are all the costs for an insurance company to operate properly.For example, a company with many branches across the country has to bear a lot of expenses for these branches (analogous to bank branches) every year. And we know that there are now Internet insurance companies that do not open branches at all, so we can feel the pressure on the cost. So to gain the trust of customers, only some large and strong insurance companies have the money to come up with a budget of more than a billion for overwhelming advertising. You often click on the Internet in the search engine once, and the insurance company will pay more than ten dollars. Some large insurance companies spend a lot of money on personnel and advertising, which also increases costs to some extent, so it is not surprising that the insurance products they sell are priced high.