How insurance should work: Disasters are unpredictable, are bound to happen and can be very expensive to resolve. So instead of each individual risking bankruptcy for participating in a system, everybody pools together money at a much lower individual cost. That money goes toward a statistical guarantee that the cost of any disaster will be covered.
How insurance actually works: For-profit companies use every tool at their disposal, regardless of ethics or legality, in order to take as much of your money as they can possibly get away with while simultaneously paying out as little as they can possibly get away with, and then pocket the difference.
Why people think first part is great for insurance, but when somebody wants to scale that up its suddenly horrible socialism.
America basically has socialised healthcare already. It’s just funneled through a 3rd party first, who jack up prices. Where do they think those premiums are going?
"When you pay the government, you’re paying for other people’s care. The taxes will go up when more people use and abuse the system and probably won’t even be used for healthcare, and will just be used for something equally unimportant to me like feeding someone elses children in a state I don’t even live in. When I pay a private insurance company, I’m only paying for me. The rates only go up when the insurance company deems it necessary. The profits go to the people that really deserve it, you know? The hard working executives.
Or not to build homes in a place called Tornado Alley, for example.
everybody pools together money at a much lower individual cost
Another example of this is would be public transport.
Another example of this would be a thousand things: Firefighters, police (not American), education, Healthcare (not American), defense, unemployment, childcare, pensions, roads…
defense
I don’t believe in socialized nuclear deterrence, which is why I think every red-blooded American should own their own backyard hydrogen bomb.
The province I’m in has socialized car insurance through a crown corporation. We all pay relatively the same rate, and there are discount tiers applied based on years of experience. If they have a good year of low payouts we get rebate cheques because its not a profit corp.
What happens if they pay out more than forecast?
Then there might be a rate increase for everyone in subsequent years, but not your current contract.
That’s the way you do it, if it must be done at all. And despite my antipathy towards cars, it seems it must.
I would think it would disincentivize driving?
Drive less > less chance of accident > fewer payouts > bigger refund check > adjust forecast lower for next year > lower premiums > GOTO 1
Or maybe it’s closer to zero sum. because some think that way while some asshole cough Alberta uses the money on extra tires and gasoline to drive even more.
Once you start seeing insurances as casinos where you can bet on something happening to you or not it makes a little more sense
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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.
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.
Sounds like we need co-op insurance?
Annnnnd when you do get into an accident, they will increase your premium next year. They cannot loose either way
Insurance is valid, profit from insurance is where it gets problematic cause the whole point of insurance is to have a similar average outcome, just less extremes in the worse case scenario.
It’s a fucking scam. People who act correctly and drive safely and punished while the people who are assholes and drive unsafely pay a pittance to cover the extensive amount of damage they are ultimately responsible 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.
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. 🙄
bc “businessmen” in america think they are providing something of value and not utter bullshit
They know it’s BS but they’re not concerned with providing anything of value. It’s all about making a profit at any cost. If it’s legal they’ll do it, screw ethics. Hell, if it’s illegal but the punishment is a fine, that’s just the cost of doing business. Fuck MBAs and suits.
Homeowner’s insurance is worse, almost as bad as health insurance. Try getting them to pay out, and if they do, watch your rates go up, or your policy get cancelled. If you have a mortgage, you must have homeowner’s insurance. State Farm cancelled me out of the blue after 25 years without a single claim.
I suspect they all conspire to cancel policies, knowing that we need to go somewhere, so State Farm cancels a customer, and they go to Allstate at a much higher rate, and Allstate cancels a different customer, and they go to State Farm at a much higher rate. This forces the customer to go through a new approval process, and sign a new contract that is probably worse for them than they had before, in addition to being a higher rate.
You say “try getting them to pay out” and follow up saying you never filed a claim? I’ve gotten my home insurance to pay out twice, once for a beer that fried a laptop (my fault, but I had coverage for it) and again when a lightning strike took out part of my solar array and some indoor electronics. They’ve also promptly paid in situations where I wasn’t a customer but the beneficiary of a claim and bent over backwards to make sure I was taken care of.
Maybe the problem is using an insurance company that farts out millions of dollars a quarter marketing Gecko, Jan, Jake, Mayhem, or Emu instead of investing that in claims. Though, I’ll give a shout-out to my homegirl Jan back when I was in a different situation and a snowplow took a chunk out of my car. Progressive took care of me then while the city took their sweet time making good on the claim against them.
It really does need to be investigated. I believe they use LexisNexis to share data.
Oh my God, you probably don’t want to get me started on that. Here it is literally (in the original meaning of the word) a scam. Companies incorporate, take in premiums, pay themselves big bonuses, then say they are not financially flush enough to cover claims, go bankrupt and THE SAME PEOPLE come back and do it again. It is a racket designed to extract money, they don’t even reliably pay claims, thankfully I don’t have personal experience with having to use them, but have read enough industry news.
I have paid enough in home insurance to buy a house. We pay for the last 40 years a rate that would imply each house in Florida is completely wiped out every 40 years but my old house is 100 this year, our current house is 85. What the state charges probably is close to the actual risk, and if we just put EVERYONE onto that plan and ran it as a nonprofit it would work better.
I never understood why it’s legally mandatory to pay a private company just for the privilege to drive a metal death box (death metal box?) on poorly maintained yet tax payer-funded roads or get punished with debt if I don’t?
Not sure if this is the case in the US but car insurance is supposed to cover the damages you cause when you destroy something with your car. Nobody cares if you can pay for the damage on your own car, but if you crash into my house or my car you better be able to pay the damages! That’s why it is mandatory. To protect others from your actions.
I have never had a claim my entire life. I’m pretty sure that I’ve paid more in car insurance than for the fucking car itself. But I’m happy to socialize the cost of some SUV lunatic that does millions in damage while looking at the phone.
