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More or less, yes they do need to be guaranteed to make money.

At least on average anyway. Or they will stop writing insurance policies.

The insurance business is the best racket to be in, same as private prison industry. Customers are guaranteed.

That's all hip and cynical, but I'm pretty sure motor vehicle insurance would be a good business even if states didn't mandate that people carry it.

It'd be more expensive for the people that did carry it, but it'd be a large business.

And of course, in many states there is the option to post a bond to prove ability to compensate.

You might check out New Hampshire. I don't have a reference handy, but I recall reading that they don't require insurance yet have more people insured than most other states.

That only helps as long as there aren't many insurance companies. If there are many insurance companies, competition between them drives the costs down to marginal cost plus normal profit, in theory.

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