5Insurance is one of those necessary evils that many people resent paying for—until they suffer an insurable event and receive a claims check. Many people pay their premiums year after year, protecting themselves against a risk that never actually occurs. The premiums are not exactly wasted—after all, had an insurable event occurred, they would have gotten paid—but the lighter wallet can feel a bit resentful that there was no realized return on the investment.
For some people without the disposable income to risk on insurance premiums that may never amount to an actual claim, this situation actually results in underinsurance or no insurance. Rather than spending their hard-earned and limited income on something with no tangible product and the possibility of no return, they hold on to their cash and the insurance companies miss out on them as profit creating customers.

One way that insurers might bring those skeptical and low-income clients into their midst and create a win-win situation of risk hedging and profits would be to lower premiums. But how can insurers lower premiums without impacting their profits? It can be easily done when an insurer reduces their operating expenses. This could work for any business—reduce the amount of money it takes to run your business and you have the flexibility to then reduce the cost of your goods.
One easy way for insurers to reduce their operating expenses is to stop spending so much money on claims. Now, that does not mean they should compromise their client’s well-being and give them less money than their claims deserve, it simply means that they should offset the cost of those claims by selling the salvage that the claims are paid out on. This can have a dramatic effect on the insurance company’s profits and can give them the flexibility in rates to start offering affordable insurance solutions to everyone.