I work in the insurance industry. I’m not sure how a “not for profit” would work. Where would they get the capital? If provided by policyholders the premiums, at least initially, would have to be much higher.
With competition, and there is a lot of it, you would think that providers of capital to insurance companies, ie stockholders, would get a market return on the capital and no more.
As for “getting out all you put in” (whether collectively or not), no people don’t, but that should not be the issue, I don’t think.
Insurance is to provide peace of mind and to avoid economic dislocation. For example if you had a 500,000 house and a one in a thousand chance of it burning down, then the “fair premium” would be $5. But you would probably be willing to pay much more, to avoid the uncertainty.
If you’re uninsured house burned down and you were out 500,000 dollars it could ruin you and your family. This is not in society’s best interst to have people ruined by random events.
So suppose an insurance company charged you $10. $5 of that can be thought of as claim costs, the rest is for expenses, commissions, and profit. Suppose the company had to put up $10 of capital for every $500,000 house it insured. Then the “profit” would be divided by $10 to figure out the return on the shareholder’s equity.
This is only an example, of course. In actuality, in the property and casualty field, due to high claim costs, legal suits (many insure companies against being sued), etc, claims have been over 100% of premiums at times. Which means their only possible profit comes from investment income.
In most insurance companies the return on equity is maybe 10-15%. Not exactly minting money.