INSURANCE COMPANIES

INSURANCE COMPANIES

I’ve already told you, I’m a born in the wool capitalist. That means I think that given a free market system most things will tend to work out based on supply and demand. I also think that the “P” word …“profit” is not a bad word. People and businesses that work hard and provide a valuable product or service deserve to make a profit.

Ok, so if that’s the way I feel, then why do I get all flapped up about insurance companies ? Simple, it’s one of the few products or service that we as consumers pay for, and then get punished if we use the very product that we purchased. I think Americans might just be over insured. We buy insurance for auto, health, dental, life, boat, motorcycle, home owner, business interruption, errors and omissions, flood, collision, property casualty, uninsured motorist, and inland marine.

Let me explain: you buy a car insurance policy that will cover you damages in the event that you are involved in an accident. Well, you faithfully make your premium payments for months or perhaps years and the unexpected happens, you are involved in an accident.

Ok, so…you call in your claim, and the insurance company steps forward and pays it (actually they drag the damn thing out for 6 months and then pay only a portion.) They often will send out an “adjuster” (I promise I’m not making this up, check out the definition of adjust in the dictionary) to change (something) so that it fits, corresponds, or conforms; adapt; accommodate: to adjust expenses to income… Anyway he basically adjusts the claim to what they want to pay…

In any case, when renewal time rolls around you find yourself canceled or at the very best with a large rate increase. (reason: you collected on the policy that you bought and paid for, and now you must be punished)

Oh, insurance companies will cry and complain that their profits are under pressure (they learned this from bankers), yet ..if you look up in any large city, the biggest buildings are owned by banks and insurance companies (actually, the banks have their names on the buildings but they are owned by the insurance companies). Yes, those very same fella’s that are for ever whining about their rates and profits.

I tell ya one thing for sure. The insurance companies have hired themselves the finest lawyers that money can buy. If you doubt that for even one second, just read thru the fine print on any insurance policy. They list of exceptions and exclusions (read that: reasons you won’t get paid) will amaze you. You will soon be wondering, what if anything does this darn policy actually cover ? Just count the amount of “ifs”, “how-evers”, “forever forths”, acts of God,and “buts” you find in your contract.

I’m wondering what life would be like if other businesses started to use the same kind of contracts and set of “exclusions” as the real pro’s, the insurance companies use.

THE RESTAURANT: For starters, they would have a one page menu, followed by 25 pages of legal
jargon. Also, they would make you take a physical before you ate so that they
could document the fact that you were already a fat bastard with high
cholesterol before you choked down their slop. Hey…I just want’a to know, how
much the darn biscuits and gravy are, after all deductibles and co-pays.

The GAS STATION: Please insert your credit card to start the transaction. Thank you, now please insert your right index finger for fingerprint I.D. and blood test. Thank you, please blow into the sanitized straw, so that we can check your blood alcohol levels. Almost done, now please bend over and grab your ankles….( sound familiar insurance fans ?)

The NEW CAR DEALERSHIP: Due to matters beyond our control and other acts of god, you must sign our waiver of liability before walking on our lot. Also, we have included a “ryder” and ancillary stipulations that insure that you must test drive and purchase a car before you leave the lot. All vehicles are sold where is an as is (ok, that is a real car lot line), and become the full responsibility and liability of the purchaser upon crossing our lot line.

Ok, you get the drift. Insurance companies are in the risk business. The better they are at assessing the risk, managing the risk, avoiding the risk, and pooling the risk, the more money they are going to make. Their analysts and researchers have charts and tables based on historical claims and payments. They know the odds of getting in an accident in a red car compared to a white car. They know the average life span of a male smoker weighing 156 pounds and a women non smoker weighing in at 110 pounds. And they know the risks associated with skydiving as opposed to kite flying.

For the most part, I spend too much money on insurance and I’m probably over insured. I often wondered if I could have just kept all that premium money if I would have been better off.

P.I.B.