Exactly. Insurance is best thought of as similar to gambling, but functionally the opposite. It’s “I’m giving you $x per month knowing that I’m probably going to lose money on this exchange, but in return if I’m hit with y disaster that it would be very difficult to financially recover from then you pay for it”.
I get that some people are frustrated by it during financial squeezes, and with liability insurance it can be annoying as it’s mandatory. But as someone who’s gotten a renter’s insurance payout, the relief of “thank fuck I’m not out thousands of dollars while having to deal with this disaster” is immense
That’s exactly how it started! People would go to a major bookmaker like Lloyd’s coffee shop and place a bet against themselves. So you would bet that your ship would sink or your house would burn down or that you would suffer a crop failure. Then if the bad thing happened you would win the bet.
Of course, if the odds are close the bet would be very expensive, so you’d have to do monthly financing. But what if the catastrophic event happens before the bet is fully paid?
Somebody had the genius idea to pool everybody’s bet and run the odds.
I can’t fault people for being confused or frustrated when we also have insurance that’s intended to work as the primary means of payment.
Having our crap tastic excuse for a medical payment system be based in insurance, and then having another mandatory insurance system that’s somehow less helpful is reasonably frustrating.
That’s fair, and yeah I’m all in for replacing the health insurance system with single payer, but I find it difficult to picture a better system for car based risks without removing cars from the equation. The alternatives involve pushing some of the financial costs of driving onto people who create less of these costs. It’s why bad drivers have to get more expensive insurance and may struggle to get insured by the medium or low cost insurers.
Additionally home insurance is rapidly becoming more frustrating to people in many places thanks to climate change. The actuarial tables don’t lie, and seeing as destructive weather events are making many places more prone to disaster, insurers are going to find themselves taking the emotional blame, especially when many people refuse to believe that the climate has changed.
Not necessarily saying our system is wrong, just that the systems being so different can make people confused. :)
The alternatives involve pushing some of the financial costs of driving onto people who create less of these costs
I mean, our current model does that. All insurance does. You pool costs with the expectation that most people won’t need as much as they put in.
A significant amount of our costs are based on statistical, not individual, risks. A 23 year old male is going to be charged more for car insurance regardless of their driving record.
A better system might just be universal car insurance via vehicle registration. Bigger pool, easier to accommodate people who can’t afford adequate coverage, and it better ensures everyone’s cost is covered.
It’s also nice to not have a law forcing people to buy a product from a private company.
I think of insurance as a cost limitation device. In case of disaster it limits the potential costs to something manageable in exchange for a manageable monthly payment. As you acquire more expensive things (house, car, etc.) those potential costs expand significantly. With vehicles your car insurance also covers some medical expenses after an accident, as well as covering any other partie’s vehicles and medical costs should that be the direction the claim goes
I can pay a couple thousand dollars a year to insure my house but I definitely couldn’t have paid the 40k out of pocket to replace my roof, siding, a couple of doors and windows and repaint the garage after a recent hail storm. Every vehicle I’ve lost to nature’s chaos had a loan tied to it which would’ve been very difficult to both continue to pay back and repair/replace the vehicles. Insurance limited those costs
That’s a good model to think of it. Insurance originated as mutual aid and I’m very in support of not for profit insurance as a concept. Like, what you’re actually paying is the price of catastrophe times the odds of it in the given time plus administrative and profit costs. What that all means is that if you can’t afford it, then you really can’t afford to not have it should you need it.
Exactly. Insurance is best thought of as similar to gambling, but functionally the opposite. It’s “I’m giving you $x per month knowing that I’m probably going to lose money on this exchange, but in return if I’m hit with y disaster that it would be very difficult to financially recover from then you pay for it”.
I get that some people are frustrated by it during financial squeezes, and with liability insurance it can be annoying as it’s mandatory. But as someone who’s gotten a renter’s insurance payout, the relief of “thank fuck I’m not out thousands of dollars while having to deal with this disaster” is immense
That’s exactly how it started! People would go to a major bookmaker like Lloyd’s coffee shop and place a bet against themselves. So you would bet that your ship would sink or your house would burn down or that you would suffer a crop failure. Then if the bad thing happened you would win the bet.
Of course, if the odds are close the bet would be very expensive, so you’d have to do monthly financing. But what if the catastrophic event happens before the bet is fully paid?
Somebody had the genius idea to pool everybody’s bet and run the odds.
I can’t fault people for being confused or frustrated when we also have insurance that’s intended to work as the primary means of payment.
Having our crap tastic excuse for a medical payment system be based in insurance, and then having another mandatory insurance system that’s somehow less helpful is reasonably frustrating.
That’s fair, and yeah I’m all in for replacing the health insurance system with single payer, but I find it difficult to picture a better system for car based risks without removing cars from the equation. The alternatives involve pushing some of the financial costs of driving onto people who create less of these costs. It’s why bad drivers have to get more expensive insurance and may struggle to get insured by the medium or low cost insurers.
Additionally home insurance is rapidly becoming more frustrating to people in many places thanks to climate change. The actuarial tables don’t lie, and seeing as destructive weather events are making many places more prone to disaster, insurers are going to find themselves taking the emotional blame, especially when many people refuse to believe that the climate has changed.
Not necessarily saying our system is wrong, just that the systems being so different can make people confused. :)
I mean, our current model does that. All insurance does. You pool costs with the expectation that most people won’t need as much as they put in.
A significant amount of our costs are based on statistical, not individual, risks. A 23 year old male is going to be charged more for car insurance regardless of their driving record.
A better system might just be universal car insurance via vehicle registration. Bigger pool, easier to accommodate people who can’t afford adequate coverage, and it better ensures everyone’s cost is covered.
It’s also nice to not have a law forcing people to buy a product from a private company.
I think of insurance as a cost limitation device. In case of disaster it limits the potential costs to something manageable in exchange for a manageable monthly payment. As you acquire more expensive things (house, car, etc.) those potential costs expand significantly. With vehicles your car insurance also covers some medical expenses after an accident, as well as covering any other partie’s vehicles and medical costs should that be the direction the claim goes
I can pay a couple thousand dollars a year to insure my house but I definitely couldn’t have paid the 40k out of pocket to replace my roof, siding, a couple of doors and windows and repaint the garage after a recent hail storm. Every vehicle I’ve lost to nature’s chaos had a loan tied to it which would’ve been very difficult to both continue to pay back and repair/replace the vehicles. Insurance limited those costs
That’s a good model to think of it. Insurance originated as mutual aid and I’m very in support of not for profit insurance as a concept. Like, what you’re actually paying is the price of catastrophe times the odds of it in the given time plus administrative and profit costs. What that all means is that if you can’t afford it, then you really can’t afford to not have it should you need it.