I feel like you’ve fundamentally misunderstood how insurance works here. Yes, on average, across the entire risk pool, claims paid out average below premiums paid in.
As an individual though you only really need to make one non-tribal claim on a home insurance policy to end up making a profit on the deal. The pathological example is a fire gutting your entire home, destroying everything - in that case you’re going to see $25k paid out to you, on average in the UK home insurance costs about £130, which would be about $170. You’d have to pay into that policy for almost 150 years to end up making a loss on that deal.
Even a fairly minor issue like a burglary requiring the replacement of $5,000 worth of possessions you only end up making a profit by self insuring after 30 years.
The other misunderstanding you seem to have is a pretty common one: “I lock my doors consistently”. Burglary is the thing insurers pay out least frequently on. Everyone locks their door and takes basic precautions to avoid it, even if someone does break in you’re not going to lose much in most cases. The big risks are fire, which is infrequent, but expensive, and flood. Flood is much more frequent than most people realise, and can easily result in paying out hundreds of thousands of dollars to replace contents, rip out all your floor boards and replace them, redecorate the house, and if you’re in an upper level flat potentially to do the same for everyone below you. Flooding is what keeps insurance pricers awake at night, wondering if they’ve accidentally under priced an unknown flood plain.
As an individual though you only really need to make one non-tribal claim on a home insurance policy to end up making a profit on the deal. The pathological example is a fire gutting your entire home, destroying everything - in that case you’re going to see $25k paid out to you, on average in the UK home insurance costs about £130, which would be about $170. You’d have to pay into that policy for almost 150 years to end up making a loss on that deal.
Even a fairly minor issue like a burglary requiring the replacement of $5,000 worth of possessions you only end up making a profit by self insuring after 30 years.
The other misunderstanding you seem to have is a pretty common one: “I lock my doors consistently”. Burglary is the thing insurers pay out least frequently on. Everyone locks their door and takes basic precautions to avoid it, even if someone does break in you’re not going to lose much in most cases. The big risks are fire, which is infrequent, but expensive, and flood. Flood is much more frequent than most people realise, and can easily result in paying out hundreds of thousands of dollars to replace contents, rip out all your floor boards and replace them, redecorate the house, and if you’re in an upper level flat potentially to do the same for everyone below you. Flooding is what keeps insurance pricers awake at night, wondering if they’ve accidentally under priced an unknown flood plain.