Cash Flow Underwriting

A price slashing tactic used by insurance companies to drum up business when times are tough.

In essence, these companies sell their solid gold policies well below their actual value in an effort to entice new customers to purchase their fancy products (even though these new policyholders might be, well...slightly undesirable).

So...why do business with customers who have stupidly bad driving records? Because the insurance guys are smart. They’ll take the immediate sales capital from these not so perfect policies and turn around and invest the cash back into lucrative investments. And down the road, hopefully these higher returns will offset the amount of money they’ll have to pay out-of-pocket to cover Billy Bob’s frequent fender benders, reckless driving tickets, and DUI’s he so kindly claims.