How to buy (and not to buy) insurance

The insurance business is either the best or the worst depending on what side of the transaction you're on.

As the insurance company you get to carefully select your customers on your terms according to risk, and then collect gobs of premiums you can invest not only to pay out claims later, but also to turn a profit. It’s a big reason why Warren Buffet’s portfolio is rife with insurance businesses and he’s outlined the merits in prior annual letters to shareholders.

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