Insurance Agencies are almost to a one, a scam.
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The concept of pooled risk is sound. It's basically the reverse of gambling- somebody is going to be a big loser, so we all pay a little to mitigate that risk. The problem really stems from how insurance is run.
As soon as you pay your premium, the money belongs to the company, and any claims they pay out is just money out of their bottom line. It would work correctly if they only got to keep an administrative fee and the bulk of your money had to be deposited in a fund for the purpose of paying claims.
The company is still incentivized to not pay spurious claims, because it would deplete the fund, but denying all claims and allowing the fund to grow to billions of dollars wouldn't benefit them, because it's not money they get to keep.
If they were required to publicly post their premiums and information on how often and how much they pay, the competition would be to attract the most customers by walking that fine line of paying every claim you could, because the only way to increase profits would be to increase your customer base.
A possible form of insurance is one where people get their money that is not used for premiums back (minus the admin cost).
The concept of pools risk is fundamentally unsound. The insurance company has costs.
For example. Lets say we have 100 customers and an event that occurs at a rate of 1 in 10 per year. That event cost 100 dollars. Thus the total cost per year for the 100 people is 1000 dollars.
Now lets add an insurance company to the mix. They have to extract 1000 dollars per year to cover the payouts from the 100 people, so 10 dollars per person, so far. In addition they have to extract enough to pay their employees. Lets assume they have 1 employee working 1 hour a week at minimum wage. That is an additional $750 a year the insurance company has to extract. Thus the total yearly cost for this insurance is $17.50, and the total yearly profit for the insurance company is $0. Insurance, like banking is a scam, adding cost to things that should have no cost.
The ideal insurance is self insured.
Nothing about what you said makes the fundamental concept of pooled risk unsound though. You're just taking issue with the fact that there is some added cost even under the most ideal scenario, which is a separate issue.
True, which is why most of the largest companies opt for self-insurance.
0.0Are we talking about health insurance here or real insurance? Either way all I say is as long as it is voluntary, whatever. Forcing people to buy insurance is a racket.
Your estimate of frequency is way too high and of expense way too low, though. 1 in 10 customers might have some sort of auto accident, but you're looking at thousands, minimum, per incident. But the 1 in 10 part is why auto insurance is a scam and they have to force people to buy it. Any sane person would save for an event that is extremely likely to happen once in your life.
The figure you're complaining about is called "Expense Ratio".
For life insurance, the industry average expense ratio is about 10.5%. For property casualty, it's about 27%.
Health Insurance uses a reversed figure called Medical Cost Ratio, which is legally required to be at least 80%-85% (depending on some criteria). This is because unlike Life and P&C, health insurance is basically always a money losing venture.
Meanwhile they are putting criminals up in the Hilton for free, and letting car thieves squat in houses even after being arrested.
They always have been.
Is Florida a proximate cause state? Proximate cause means that if the root of the damage is covered, any derivative damage is covered, regardless of whether or not it would have been allowable on its own.
I had an insurance company try that shit with me, when they said water damage wasn't covered even though the water intruded due to something that was covered. I let them know that I knew the law in my state was proximate cause, a different insurance company had lost a case within the last year making the same exact argument they had, and that if I sued them and won they would have to pay my attorney fees and triple damages.
They decided to pay after I told them I was very happy to take them to court in a lawsuit I was sure to win and profit handsomely from. A lot of times they will deny your claim simply hoping you'll go away, and when you don't they cave because they don't really have a lawful reason to say no. It's still bullshit though. You shouldn't have to fight to get what is lawfully yours.
Well yeah, mob protection rackets are more legitimate than insurance companies.
And federal governments.
always have been.
The best thing about not having a car is not having to pay mandatory jewsurance.
Yea they screwed my dad outta 50 Grand in his insurance retirement fund.
It proved to me that a paper trial is vital in dealing with any like them. Because otherwise they'll just outright lie.
When my dad was forced onto disability social security, the life insurance company suddenly didn't get two weeks of automatically withdrawn from his checks payments. Oops, canceled.
A for profit insurance company's business model is precisely the same as a casino. Every policy they write -- like every play on a slot machine -- is a positive expectancy bet for them and a negative expectancy bet for you. They've done all the math and they understand the risk/reward on all of their policies a LOT better than their customers who just 'know' they 'need insurance'. Unlike the casino, though, insurance companies have an additional layer of nastiness where they can and will welsh on payments when they lose the bet, as in this article. Some of that can be legal, say where they just understand their policies better than their customers (the customer wasn't as covered as they thought they were). And some of it can be downright nasty, where they will just refuse to pay or underpay and see if the customer has the resources to take them court.
On average self insurance is a much better investment than an insurance policy. However, that's with the caveat that you have to have the money set aside (preferably in a low risk investment) to cover your worst case risk, and you have to be realistic about what that risk is.
Mutual-benefit nonprofit corporations are far more likely to be honest with their policy owners. It's too bad that they're hard to find these days.
And the vilest people are their most ardent sales interns. "Your stuff can be replaced/they have insurance."
I won't be surprised if we see another killdozer situation within the next year or so
Then self insure.
Policy pricing put in a mutual fund has a better chance than insurance paying off.
To be clear, Insurance Agencies are not Insurance Companies.
Agencies hire agents. They're the people you go to when you want to take out an insurance policy.
Once you're insured, you deal with the companies directly.
Edit: Just saying this so that you don't get mad at your insurance agent; they're innocent. The insurance companies are the ones that suck.
There's a reason Muslim countries ban it as a form of gambling.
Oh, you thought Ned Flanders' like about it being "like gambling" was a JOKE?
"I bet $1000 my house burns down this year."
"We bet $300000 that it won't."
That's insurance in a nutshell. It's just a gamble, on a result that, in theory, you don't want. Like betting on the team you don't like winning the superbowl.