Its like gambling, I bet 100 bucks something will happen to my car this month. Damn nothing happened, lost again.
It’s not gambling, it’s risk aversion. They are not the same. It’s assuring you’re protected from harm by distributing out the costs in case of harm, that any individual couldn’t handle.
Gambling the goal is to get money. Insurance the goal is distributed liability so that possible danger will not bankrupt you. You still often can not come out ahead with an insurance payout, but hopefully won’t come out bankrupt.
That’s part of why medical insurance is so bad these days is because it doesn’t even prevent that. But it’s still an insurance, and not one that you want paying out.
Hell, not all insurance is even monetary --conceptually, saving grain silos for drought and famine is still insurance.
Actually, insurance is like gambling, your goal is just to loose, not to win. Lloyds, the world’s first and foremost insurance company started as a London coffee house where rich aristocrats met and bet on the return of ships. This was the pure gambling stage. Merchants soon started to bet that their own ship won’t return and the rest is history.
So you think getting cancer and having your medical bills paid is winning? Because that’s one form of insurance. Sure, if you get into certain types, it can be closer to gambling. But it can be further or closer
Yes. In this framing, where the goal is to lose the bet, getting cancer is winning. Winning the bet is a bad thing.
Thats a really dumb analogy.
You could frame anything involving risk as “gambling”.
In gambling you potentially profit from risking losses. With insurance you pay to mitigate your risk. Not really similar at all.
Except you know legally required.
Forced. And raped.
insurance is a scam. us imsurance seems more so.
put that money in a savings account instead. if you are not living in a place where you are forced to get private insurance that is.
usians are so ingrained with this insurance thing.
I had pet insurance because my dog eats things that aren’t food but it tripled in price and I couldn’t afford it anymore especially since it didn’t help with this non-emergency needs so I started putting the money aside in a savings account and it was super useful. I have money set aside for his vet care and it earns interest. Not a lot but I feel comfortable that if he eats something and, we’ll be able to get it taken care of.
I don’t think it’s going to be a good idea for everyone to do it but I do think it is a good strategy in some situations.
I have been putting £60 a month aside for my 2 cats since they were born 14 years ago.
After 12 years, one of the cats got bladder stones. It took some effort to diagnose at first so he had blood tests, urine tests, more extensive blood tests, several vet visits and 2 x-rays. Once diagnosed, surgery was arranged and the stones were removed.This completely wiped out my cat health fund.
I continued to put the money aside, and then the same cat developed diabetes. So I now have another monthly bill of ~£40 a month for insulin and needles.
My recommendation is to get insurance. Its always a gamble, but that money you spend on insurance could offset 1000’s in vet care.
Health insurance in the USA maybe and a couple of other insurances may seem that way. However your private saving can only be so much. Get into an accident in your car - the 10 million in damages is paid by the insurance. Your car is broken afterwards and you manage to cause an accident on your bicycle- the damages is covered by your normal damage insurance. You are injured - the costs are not covered by your insurance. Hence you sue the insurance - your legal insurance covers the six-figure legal fees.
Now I could spin that further without deviating much from reality - even in Europe. Yes technically you’re better of saving the money instead of spending it on insurance - that however is a gamble on your bad luck. Great if it works out - there’s likely no way you could ever save enough to cover all eventualities
six-figure legal fees.
part of why it’s a scam tbh. in my country a car accident will never cost six figures because healthcare is public, car parts are not that expensive either. unless it’s something really bad or unique.
Yeah, honestly that’s just untruthful. Any collision in a modern car needs an entire new front, because of damages to the fragile pedestrian safety systems and the electronics. A new bumper on a 2017 VW is around 1500 Euros painted. Another 1500 for the head lights, the labour cost is obviously country dependent. But even a small accident in a parking lot has damages almost 5 figure high when two modern cars are involved.
When you get into a really bad accident on a highway and dozens of vehicles get damaged, the road is damaged, the cargo of trucks gets damaged etc, you can easily get into the millions if vehicles get totaled or the cargo is expensive. And you car insurance also covers damages to the passengers. If you cripple a child for example, that is at least 10 million in damages, for the pain, the lack of a normal life, the renovation of the hoise of the parents as well as the car, etc.
Damages can become extrodiarinally high, so high in fact that you’re better of killing someone im Germany (by accident) than to just cripple them as that is much much more expensive.
you are justifying the scam by how it works in the law of a specific country here
Considering the fact that there are over 30 countries that have a civil code derived from the German one, I assume it’s not just one country.
Besides you used health insurance in the USA as the only basis for your argument.
The problem is insurance inflates the prices of all the things that take insurance so much that you can’t afford it without insurance anymore. I could put the money I spend on health insurance every month into savings instead but if something actually happened I’d never be able to afford the bill.
yes, that’s part of the reason why it’s a scam.
Never said it wasn’t. I’m just saying trying to save on your own will not work under this system.
yea, with healthcare you guys are in way too deep. it’s gonna take massive mobilization in the streets. and car insurance is mandatory in the us too, isn’t it?
Good recent example from myself. I was hospitalized a few months ago and the attending doctor wanted to do a test outpatient once I was released. At the time I had no insurance, I was in the process of signing up. I was quoted $300 for out of pocket, so I decided to hold off a month until my insurance kicked in. That test was only a $350 copay with insurance.
Which is part of why it may feel like a scam, right?
Insurance should in theory be a good thing, but the manner of implementation means that on-paper costs are outrageously high, but yet your insurance company magically gets a 90% discount on everything for being “in network” - which you as an individual who wanted to pay for your own care couldn’t benefit from.
It’s the very definition of collusion.
Need a new paint job? Get in an accident. Check engine light? Get in an accident.
I am not a
lawyerperson whose advice should be listened to on anything, ever.Once you start seeing insurances as casinos where you can bet on something happening to you or not it makes a little more sense
I used to be with a mutual insurance, which was still actually a mutual insurance, meaning the customers were also the shareholders. I got a small dividend most years out of whatever surplus existed.
I first thought of starting a nonprofit insurance (all kinds) 40 years ago. It really is that obvious a market. Risk pool is always better when it’s bigger. Obama care did something, but not enough.
Wish we could have that for fire insurance in California but the company would go belly up by the end of the month.
Conversely, you can also just drive around with no insurance at all and still do all the safety things and be terribly careful as if you had insurance.
Most can probably go through life without ever having to use the insurance or be stopped by the police.
And if you ever do get into an accident, if it’s not that serious, you’ll end up paying the same amount up front as you did if you had made regular payments over many years.
If it’s serious, no matter how you deal with it it’s going to be expensive … with insurance it will cost you … without insurance you’ll probably end up in prison.
Tune in for more from my TED talk
Most can probably go through life without ever having to use the insurance or be stopped by the police.
this is anecdotally super wrong.
I drive like 15,000 km a year (VERY LITTLE) - in the past 20 years I’ve hit probably a half dozen ride programs and been rear ended twice by someone else while fully stopped at a red light
While I’ve never had to actually file an insurance claim, there have been plenty of times I’ve had to present it
Where I live, the part of the car insurance that covers damages on others and their property is mandatory.
The insurance for yourself and your own car is optional, but I think it’s fair to require sone kind of guarantee that you can cover the potential damages you are able to do to others with a car.
Cops will stop you, if you don’t have the mandatory insurance, have unpaid car taxes, use fake license plates or skipped the EU check. Police cars have automatic license plate recognition to check that sort of thing.
Many police now use automatic scanning to check for valid registration or insurance. There are also some heavy penalties for driving without insurance. Something like a simple RIDE check (impaired driving check point) could reveal you have no insurance and you could face a lisence suspension. You could also be subject to an expensive lawsuit if you do hit an expensive car in an at fault accident.
yeah but the us is a dictatorship. fairer countries probably isn’t forcing you to pay private insurance nor they are scanning your plates.
You could get the minimum insurance required by law and then dedicate a saving account for when you might need it.
The better argument would have been to say that there are life insurances that you can borrow against, so why not car insurances. I guarantee the reason is because of lack of demand and therefore not profitable. If people were wanting such a thing, someone would provide it, but the reasons for such a policy as well as what the collateral is are two different things.
The idea is when everyone pays into insurance the collective fund is used to pay for the costs any individual wouldn’t.
Thankfully accidents or thefts don’t happen to everyone, but if they do you usually get more out than you put in (personal liability is usually millions of dollars, nobody puts that much in individually).
Where this goes wrong is when fraud happens or insurance companies are incentivized to manipulate rates to increase their profits.
But what about the shareholders? Gotta pay out them sweet sweet dividends.
Mutuals and professional body insurances are a thing to.
Where this goes wrong is when fraud happens or insurance companies are incentivized to manipulate rates to increase their profits.
I’d say the problem is that insurance companies can take profits above operating expenses at all. These should all be strictly regulated (if not entirely state-run) and predicated on funds going to reimbursements for expenses + minimal admin overhead. If money is leaking out the window to shareholders via dividends and stock buybacks, its effectively being embezzled from policy holders.
In my Canadian province car insurance is government run and if you’re a good driver your premiums and license fees are reduced
Must be nice
It is. I’m in one of those provinces. We get rebate cheques if they take in more cash than outgoing.
We also had an accident where somebody turned into us, but no witness. The insurer of both parties is identical because its the same for everyone, so they did a 50-50 fault and we both get our car fixed with no premium changes
We also had an accident where somebody turned into us, but no witness.
I mean, in my experience that’s the point where you put in a call to the local PD and get it reported, so the accident doesn’t go on your record. If their car is t-boning your car, its a pretty clear-cut case of them being at-fault.
But if it was minor and folks were in a hurry and nobody cared, I definitely get it. Nice to live in a country that friendly and chill.
There’s an argument for maintaining a reserve (think about disaster prone areas for things like floods, hurricanes, etc…), but I agree that it would be better for insurance organizations to be prohibited from being publicly traded (private or public benefit corporation only)
There’s an argument for maintaining a reserve
In a federalized system where you print your own currency, there’s really not. Insurance premiums become a deliberate dampener on economic growth that offsets the possibility of future spending (and subsequent inflationary risk) during a large disaster, and an incentive to mitigate risk in order to reduce expenses.
But there’s no money in simply holding cash in reserve. That’s why private insurance companies typically try to parlay their premiums into investment ROI. The real money in running an insurance company is what you can do with all the cheap cash you’ve collected while you’re sitting on it, with the expectation that you won’t need to pay it all out again any time soon.
A public system wouldn’t need to hold cash in reserve that it can print/loan itself at ZIRP. And it wouldn’t need to seek private ROI ahead of inflation or to pay off private investors in order to mitigate the risk of holding large volumes of cash for a long period of time. But - most importantly - a public insurance program attached to a large state/federal government has a financial incentive to mitigate risk on travel that it can combine with actual public policy to improve the economy overall.
Rather than just insuring a house or a car, state officials can implement public works that reduce the risks of flooding, provide emergency relief during natural disasters to mitigate loss of life, and reduce instances of highway accidents / fatalities. Instead of simply outsourcing and privatizing the risk management aspect to an independent contractor, they can attack the problems of social risk holistically, then set policy prices to reflect the risk-adjusted negative externalities of cleaning up a mess created by risky individual behaviors.
Rather than just insuring a house or a car, state officials can implement public works that reduce the risks of flooding, provide emergency relief during natural disasters to mitigate loss of life, and reduce instances of highway accidents / fatalities. Instead of simply outsourcing and privatizing the risk management aspect to an independent contractor, they can attack the problems of social risk holistically, then set policy prices to reflect the risk-adjusted negative externalities of cleaning up a mess created by risky individual behaviors.
Uhhh, that sounds like socialism
No better way to reduce car accidents than to kill 100 Zillion people.
I don’t understand why we don’t have nonprofit insurance. It would be cool if someone started one that focused on serving poor people.
Where’s the disincentivization for manipulation?
Not all markets are the US.
Ideally you have an independent regulator who makes sure there’s competition, and if the industry can’t keep up it gets cleaned up into a well regulated government entity.
Even the US has things like Medicare/Medicade. That is, government run services that are supposed to just be a service, not a profit-making activity. Funnily enough, they don’t have the same issues.
They made issues, unfortunately. Medicare Advantage (latest iteration) has private contractors handling your care which the government reimburses, and Medicaid varies from state to state, with some covering more and others far less (and some having similar arrangements with private contractors).
In theory: Public backlash leading to competition taking market share, and regulatory penalties.
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Never spent a dime in insurance on it. Never had to fix a tail light. Or deal with a flat tire. Or struggle to fill a tank.
Just pay the ticket and take the ride.
Annnnnd when you do get into an accident, they will increase your premium next year. They cannot loose either way
Sounds like we need co-op insurance?
And then read about “moral hazard” and try not to scream.
Yeah, insurance company, it’s the customers you’ve got to watch out for. 🙄
How do the ‘ppl who actually know’ defend this obvious scammy aspect of the whole thing? Genuinely curious
Insurance is a pooled risk fund. Basically x% of people are going to get into accidents and therefore you’ll need z dollars to cover the the group of insurees.
The downside is this means that if you’re not getting in accidents, your money is paying for someone else’s accident. The upside is (theoretically) if you get in an accident your covered.
While insurance companies can be scummy, the concept of insurance is basically a support network you pay into.
The problem is not insurance, its for profit insurance who exist only to make money.
The whole profit incentive seems to do a lot more harm than good, no?
It always does.
Term life is cheaper than whole life, and generally a much much better deal long term. What this person is proposing is car insurance that works like whole life insurance.
