Insurance is a business that involves pooling funds, or premiums, from a large group of people to pay for the losses that a few may incur. Like any business, insurance companies work by bringing in more money than they pay out. Their main expenditures include payouts to customers, and insurance companies operate under the statistical principles that predict larger collections of premiums in any given year than payouts. Statistically speaking, in most years, insurance companies are in a position to make large profits. But when disaster strikes, if the insurance company has not planned ahead to manage claims or its cash reserves, then policyholders may be hung up in the system or denied claims that they rightfully deserve.