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What do insurance companies do with the premiums they take in?

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What do insurance companies do with the premiums they take in?

Question is from why does insurance often provide peace of mind

I got this question in a job interview.

Other related questions to my question are:

How do insurance companies use the premiums they collect?

Do insurance companies make money on premiums?

What do premiums have to do with the cost of insurance?

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The correct answer by me is: 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.

The title of my answer is Insurance Premium Definition

The reference of my answer is Investopedia

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