In This Popular Game, the ‘Winner’ Pays All the Other Players.

By Chic Hollis – Philosophical Musings

Protection is something a modern, sophisticated society like ours demands. But it can be a very expensive commodity, whether it is furnished by the Mafia or the insurance industry. The protection racket is so entrenched in our way of life that very few of us realize what a Sherwood Forest we inhabit. Take from the rich, who can afford to pay the insurance premiums, and give to the poor, who can’t (and to all the intermediaries who make a good living gambling with our “contributions.”) So respected are the giant insurance companies that no one in our complex economy suspects that the cheerful, clean-cut, commission-earning insurance sales reps in those neat little neighborhood offices are actually running the biggest gambling business in our society.

A legal scam may be too derogatory a term for the noble practice of taking your money to protect you from all the frightening consequences caused by those periodic catastrophes that loom just over the horizon. You will never see that premium money again if you “win” your bet. All insurers hope that the unwanted consequences of bad health, serious accidents, destructive fires, or damaging storms won’t overtake their families, their homes, and their private property.

Employee health insurance plans (once called “Major Medical Insurance”) have evolved into HMOs and PPOs that the public is led to believe promise policy holders immediate, life-saving medical attention. These organizations, however, hide behind detailed legal contracts that only generally outline the limited amount of care and the kind of treatment that their insurance covers.

The all-inclusive “Home Owner’s Insurance” policy is very specific about what it covers and what it excludes, and in California, a major claim paid usually leads to a cancellation of the policy at the maturity date. Worker’s Compensation Insurance covers specific work related illnesses and injuries due to accidents “on the job.” Since the cause of an illness or an injury may be disputed by the “medical experts” who approve a worker’s comp claim, an employer who pays for worker’s comp insurance and employee medical insurance is paying twice for the insurer’s administrative costs of maintaining a healthy employee.

Only a very few insurance companies go out of business. If their profit margins are whittled down because investments of the premiums received have rendered less income than anticipated or because some major disaster drastically and abruptly reduced their fiduciary reserves, the insurance companies petition the State Insurance Commissioner for an immediate increase in premium rates. No one wants an insurance company to go bankrupt because that would hurt all policy holders and the image of the honorable insurance business.

Because of frivolous law suits where the plaintive has been generously rewarded for health problems supposedly related to (or induced by) mold, the premiums for home owner policies have sky-rocketed in anticipation of more law suits. Insurance concerns about mold in a dry, desert setting like California are not reasonable compared with Florida and Louisiana. However, in response to this legal threat in other states, the insurers in California have legally amended their local home owner’s policies to restrict the liability related to mold that the insurance company will accept.

Insurance is not an altruistic business aimed at protecting the poor and the innocent like the police force. It is a business like any other that is organized to make a profit for the shareholders and pay outrageous bonuses to its top management. These companies try to limit their risks by accepting customers who are healthy and not accident prone, can afford the premiums (but that’s not a big problem since a policy can be cancelled if any premium is paid late), and whose historical experience indicates that they are unlikely to submit a claim.

Like the banking business, the insurance business has been more interested in its growth and survival than in improving their “product” and their services to their valued clients. The evolution of products such as “no fault” automobile insurance, HMOs, and here in California, expensive and very restricted earthquake insurance demonstrate the industry’s orientation in reducing the number of potential claims, the high cost of litigation, and the amount of awards to claimants by sympathetic juries. A relative few clients actually submit claims because the deductibles are high in order to reduce annual premium costs. Policy holders have to cover the costs of outstanding claims, the expenses of policy administration, the work of “claims adjustors,” and any legal fees incurred that are paid by the insurance company.

Safe drivers, although given discounts for their driving records, pay for the careless drivers. The younger, healthier portion of medical insurance policy holders contribute far more than is necessary for their class in order to pay for the medical procedures and treatment of the older, sicklier insured. And the vigilant, cautious, safety-conscious home owners who rarely file claims pay for those families who “have bad luck,” face disasters head on, and need help with their insured loses.

There are no refunds for insurance premiums paid. This is a gambling business, remember? If nothing happens to you, you “win,” and the insurance company keeps all your money to pay for their liabilities to the “losers” and to cover the administration costs of running the game! So, give until it hurts, there is no such thing as having too much insurance, unless it’s life insurance. You can’t personally benefit from buying that coverage in the first place.

No one bothers to read their insurance policies because they are non-negotiable and subject to amendment for the benefit of the insurer, not the insured. Improved coverage for the insured always costs more. Inflation, you know, and of course the higher home construction costs, the escalating out-of-control hospital costs, the more expensive vehicle replacement parts, and the ever increasing hourly labor costs for auto repairs (plus overhead.) Not to mention the increased cost of Federal legislation that impacts everyone’s costs. For example, one objectionable new stipulation for medical care givers is that interpreters should be employed to translate orally or in writing what procedures are being rendered by their staffs to non-English speaking patients!

Those of us who prefer to be self-insured cannot escape any official regulations that require insurance. All vehicle owners supposedly must have liability insurance in California, or you can’t register your vehicle. Yet, there are so many drivers on the road without insurance that a rider to your automobile insurance policy can be purchased to cover collisions caused by an “uninsured driver.” Now there is a move to give driver’s licenses to illegal immigrants in California. Good idea?

Most of the people working for the insurance giants are decent people like those folks who work in the gambling casinos in Las Vegas and Atlantic City. Both businesses need us to gamble with our money. We have a choice about how much to gamble in casinos, but we have little choice about what to pay for insurance to elude the disasters in the always dangerous unknown future. Socially, the pressure is on us to gamble on insurance even when the chances of recovery may be slim. Those probabilities are known to the actuaries who work for the insurance companies, but that information is not shared with their clients. The least known about insurance, the better!

Today, there is a big political controversy over providing everyone in America with health insurance. And who is to pay for that? Those repentant employers, who originally decided to pay their employees’ health insurance premiums instead of granting “inflation compensation,” are backing off that fringe benefit because medical premiums have significantly exceeded inflation during the past decade. No one in the insurance industry wants to negotiate health insurance premiums individual by individual, so some scheme of socialized medicine similar to Medicare is likely to adopted in the U.S. eventually.

Cradle to the grave insurance protection along with more ubiquitous and intrusive national security will certainly cost someone a bundle of money. But hey, where there’s an economic and social demand for some entitlement, there’s got to be a way. We’re bound to get something bureaucratic, expensive, inefficient, and probably unsatisfactory – the typical solution.

Nevertheless, relying on personal savings won’t work in America, so we might as well extend gambling, as long as it doesn’t become addictive. A new category of poor folks might result which we used to call being “insurance poor.”

Despite the promises of our trustworthy politicians that poverty will soon be conquered in one of their many “wars on words,” we shouldn’t ignore what the Lord Jesus supposedly predicted in the Gospel of St. Mark: “For ye have the poor with you always.” It might as well be the insurance poor!

Chic Hollis is a longtime drummer and motorcyclist, who served in the US Air Force in North Africa. Married 4 times with 5 children born in 5 different countries on four continents, Chic is a politically independent citizen of the world interested in helping Americans understand the reality that is life overseas where many intelligent, educated, and industrious people aren’t as privileged as we are in the US. He studied Latin, Greek, Russian, French, Spanish, Portuguese, and German and ran several large companies. Sadly, Chic Has left this planet and we miss him very much, but we are very pleased to display his amazing writing works.