how premiums are calculated
insurance premiums may increase after the policy period ends the insurer may increase the premium for claims made during the previous period if the risk associated with offering a particular type of insurance increases or if the cost of providing coverage increases insurance companies generally employ actuaries to determine risk levels and premium prices for a given insurance policy the emergence of sophisticated algorithms and artificial intelligence is fundamentally changing how insurance is priced and sold there is an active debate between those who say algorithms will replace human actuaries in the future and those who contend the increasing use of algorithms will require greater participation of human actuaries and send the profession to a next level insurers use the premiums paid to them by their customers and policyholders to cover liabilities associated with the policies they underwrite they may also invest in the premium to generate higher returns this can offset some costs of providing insurance coverage and help an insurer keep its prices competitive while insurance companies may invest in assets with varying levels of liquidity and returns they are required to maintain a certain level of liquidity at all times state insurance regulators set the number of liquid assets necessary to ensure insurers can pay claims special considerationsmost consumers find shopping around to be the best way to find the cheapest insurance premiums you may choose to shop around on your own with individual insurance companies and if you are looking for quotes it s fairly easy to do this by yourself online for example the affordable care act aca allows uninsured consumers to shop around for health insurance policies on the marketplace upon logging in the site requires some basic information such as your name date of birth address and income along with the personal information of anyone else in your household you can choose from several options available based on your home state each with different premiums deductibles and copays the policy coverage changes based on the amount you pay providers will base premiums on the enrolee s state the individual s history and other factors the other option is to try going through an insurance agent or broker they tend to work with a number of different companies and can try to get you the best quote many brokers can connect you to life auto home and health insurance policies however it s important to remember that some of these brokers may be motivated by commissions 