> Assuming that insurance is correctly priced, buying a policy in any form is negative expected value
Actually it's quite rare for insurance companies to record an underwriting profit, I believe. Their profit generally comes from investing the pool of premiums. If you invested your premium instead of buying insurance however, then I suppose the expected return would have to be better.
Yes that's totally correct but they're factoring the entire reinsurance/reinvestment pipeline into how aggressively they can price the policy in the first place.
Actually it's quite rare for insurance companies to record an underwriting profit, I believe. Their profit generally comes from investing the pool of premiums. If you invested your premium instead of buying insurance however, then I suppose the expected return would have to be better.