Comments on: A sucker bet

by: M

Thu, 22 Mar 2007 03:15:23 +0000

So glad you’ve got this conversation, going, Polimom, it begs for attention. The part that bothers me the most is that I am not just paying a high premium for choosing to live in a hurricane prone state as I was pre-Katrina, I have lost my insurance (wind and hail only, by the way, my insurer is “kind” enough to continue insuring me at a higher price for a policy that no longer includes wind and hail.) because of the catastrophic results of the army corps of engineers’ negligence. How can that be? But there is no option, I must pay for insurance because I have a mortgage. So I will now have to pay twice my former premium, and I will now have three insurers, one for flood, one for wind/hail, and one that excludes absolutely everything that occurs when either of the first two occurs but must cover something, right??? The latter, by the way, includes a few hundred dollars that the state’s Fair Plan charged back to private insurers b/c the state’s plan couldn’t afford to pay its Katrina claims…the law allows the state plan to levy a charge on private insurers who can then make their insureds pay to recoup their loss. SO, my private insurer is charging me to pay for the state run plan on top of the premium I paid and the premium I will have to pay to the state run plan for wind and hail coverage.
Since i have no faith that the state-run plan would reimburse me if there were another disaster, I see my choices as praying or moving.

by: Polimom

Thu, 22 Mar 2007 00:31:52 +0000

So the profit motive of a private insurer is directly at odds with the whole point of insurance.

That’s exactly how it looks to me.

by: A sucker bet | The Moderate Voice

Wed, 21 Mar 2007 19:15:19 +0000

[…] (Cross-post from Polimom Says) […]

by: John

Wed, 21 Mar 2007 18:16:02 +0000

Insurance is a geat example of market failure.

How do you make an insurance system work? By diluting risk. So for everybody who’s going to “hit the jackpot” by having some disaster that means a payout much larger than what they’ve paid into the system, there’s everybody else who’ll never get their money back. (What they do get, theoretically, is peace of mind knowing that they won’t be financially ruined by some future disaster.)

The problem is that for the insurer, the surest way to increase profits is to eliminate risk by getting rid of anybody who is more likely to have just such a disaster. So, if you provide health insurace, you can make more money by only insuring people who don’t get sick.

So the profit motive of a private insurer is directly at odds with the whole point of insurance.

We try to deal with this through regulation, because a totally free market simply fails in this industry - and leaves taxpayers holding the bill (yay, externalized costs!). THe problem is, the insurance industry has deep pockets for lobbyists to make sure that they don’t get too regulated.

by: Pan_theFrog

Wed, 21 Mar 2007 18:15:19 +0000

Like Ed T says, if they don’t share holders will be all over them.

I am not sure I understand this world in which everyone ’says’ they want companies to do good, but if you find out that the CEO passed up the chance to make a couple of billion profit by doing good, then you jump all over him.

And if some CEO only makes OK profit, but does no harm, then you get rid of him so you can make big profit.

It is time to ask which is more important; your pocketbook or your conscience?

by: Ed T.

Wed, 21 Mar 2007 17:02:08 +0000

That would be a sucker bet. Of course the insurance cos are gonna post record profits. If they didn’t their shareholders would sue them into oblivion.

I love the insurance ~~racket~~ game. It is a lottery that we can be required (either by law, or by contract) to play, but if we hit the jackpot (if you can call losing everything you owned “hitting the jackpot”) then the other side can simply refuse to play with you any longer, thus putting you in violation.

~EdT.