Insurance tends to have maximum profit percentages mandated, at least in the US. I'm not an expert in this, but I assume that this results in a bit of a perverse incentive where the only way to increase your profit is to increase your costs.
No, because their income as capped at the premiums collected. They want to spend 80% on expenses, but not more than that. But they also want projected expenses for next year to go up.
From what I'm seeing, I suspect insurance companies have multiple internal groups, at least one that want to reduce expenses and at least one that wants to increase revenues. Each is motivated independently of the other.