I know insurers make money somehow, and I presume it's on investment of the money (like banks, which also make money by taking your money and paying you interest of 1-5%).
So I guess it's like a bank? and the payouts for damages are like the interest paid to people for their deposits? And in the end you can pay out more than you take in, but make money investing the cash flow because you hold the money for a time before paying it back out?
The largest players in the investment markets are insurance companies. When I used to trade on the floor of some of the commodity exchanges, for example, Prudential had so much action in the SPZ pit they had their own broker to fill paper.
Further, MANY long term real estate investments are funded by insurance investments.