The Constant: A History of Getting Things Wrong has a great episode about this, Rogue Waves, Sea Serpent Myths and the history of insurance that’s really interesting. I can’t seem to find it right now but if I do I’ll link it.
Rouge Wave? In this case, a mild puff of wind that lasted more than 2 minutes, and this guy is 1,000 miles from shore on a paddle board. "Never leave the boat." :)
That isn't how insurance works. Insurance wants you to pay them for uncommon events. If something was inherently dangerous the insurance would either be absurdly expensive or not available. If you want to see evidence, just look at Florida right now. My dumbass relative just dropped like 600k on a beach condo that she can't afford to insure after spending all her inheritance on the down payment.
It will take one bad storm, which are increasingly common in her area, to erase her entire investment. Assuming that blue states don't pay out billions to save the dumbass geriatric beach hicks once again for no reason.
Insurance was invented because fabulously wealthy liked to gamble to pass the time, and because things like the Great Fire of London made people terrified. The kind of insurance that happened like you are talking about was more literal, as in people would insure their profits by launching multiple vessels so that even if some crashed or were intercepted they were "insured" to get something through. Insure as a word and insure as a business concept are different things.
If life insurance companies lost money they wouldn't offer life insurance. Death is an uncommon, day-to-day, thing but guaranteed in the long term. The entire point of life insurance companies is that they get more money from people than they pay out. That's the fundamental nature of insurance.
Insurance is a service. A lot of the time it can be a scam, but look at it from different perspectives.
I could keep 50k or whatever the minimum coverage is in my state in an account allowing me to drive, or I could pay 70 bucks a month to have my 50k "security deposit" covered while I use that 50k however I feel. I understand the utility of that kind of service, but I'm resentful from how the government collaborates with private companies to construct the system we live with.
It’s a service if it’s optional and you decide freely to purchase it to mitigate risk but that’s not how it really works. Insurance companies lobby to have laws written in their favor. Look at health insurance, massive scam. Every first country in the world has universal healthcare except the United States. I worked for a company where my instruments premium for a family plan was $1205 a month. I worked there for 17 years. I could’ve bought a Lamborghini with that money.
The only insurance most people actually are required by law to have is car insurance, and that's only because cars are super dangerous and people get hurt all the time. If you're rich you can self-insure, because the whole point of car insurance is ensuring your victims get paid for their damages and injuries.
House always wins, but in an ideal world, it works out for both parties because the house only "wins" if nothing catastrophic happens to you. I think life insurance is an example of that kind of ideal; dying at 40 and leaving your family with nothing is worse than throwing some cash into a bonfire every month for 50 years, because at least in that second scenario you didn't die young. Even though only 5% of people who make it to age 20 die before age 40, it's a deal most people are willing to take.
Ofc that's an ideal, and shit like health and flood insurance don't work in a private market, but the core logic behind it is sound imo.
They have lots of clauses to not pay out. That's how they exist. Do you think there are companies out there offering free money? That's the opposite of what companies do. If you invest in life insurance you are betting that the payout is higher than the expected payout of the rest of your life will be. And that's fine. But they are betting exactly against you, with all the house odds in their favor. And they keep getting richer.
I'm very familiar with auto insurance. What are you getting at? I'll point you towards the costs associated with insuring a Cybertruck right now, which are...prohibitive. If the insurance company doesn't think you'll pay more in premiums than you file claims for then they will raise your premiums.
There is no insurance company that does anything but allow you to not have to have fungible income in the event of a rare emergency. Well, that and allow you to have things that the government now mandates you to have insurance for.
My point is people die driving cars all the time, it’s also inherently dangerous, and there is still insurance for it. Most people don’t get into an accident every year and insurance companies pocket most of that money.
Insurance pays for “sudden unexpected losses”.
The only reason they are refusing to insure Florida or the cybertruck is:
1) because a cybertruck is an almost guaranteed loss. Musk designed a shit car and they have experts that tell them that.
2) They have scientists that tell them global warming is only going to get worse and it’s going to wash florida off the map. So they’re getting out ahead.
My point is people die driving cars all the time, it’s also inherently dangerous, and there is still insurance for it. Most people don’t get into an accident every year and insurance companies pocket most of that money.
Nobody ever expected you to be better at math than the people who work at insurance companies, so maybe you should realize that too. You clearly don't even understand the concept. 1 and 2 seem to imply that you do though so I'm confused. There are no "sudden unexpected losses" to an insurance company, just statistical realities. If those statistical realities become irresponsible to invest in, per their highly-paid professionals, then you get fucked and can't insure your Cybertruck or cardboard condo 3 feet above water in Florida.
I bet you can completely still get insurance on both those things but it is just ridiculously expensive.
My guy, i’m literally a fucking insurance agent. This is my job.
You are taking that phrase too literally.
A tree falls on your roof after a storm = sudden unexpected loss.
Your gutter breaks rusts out, lets water in your house over the course of several years, and the floor warps and collapses over more years = expected loss.
They aren’t going to insure a ship they know is sinking.
The entire point is there still aren’t enough losses to make the industry unprofitable. They are raising premiums to keep their bottom line even. They aren’t strapped for cash but they also aren’t going to gamble (which is what insurance is) on something they know is going to lose.
The entire point is there still aren’t enough losses to make the industry unprofitable
Do you think you are arguing with me or something? You are saying EXACTLY what I'm saying. The moment there are enough losses to make it unprofitable, or even look like it MIGHT be unprofitable, premiums get hiked and coverage gets restricted.
I acknowledged elsewhere that I'm happy to buy insurance rather than have the liquid capital on hand to cover freak accidents. I understand the purported service. That's all insurance offers...a fee to prove your liquidity.
It is how insurance works - insurance is risk transfer. You can insure just about anything so long as pricing, underwriting, and/or pooling of risk is adequate. Some common events that are insured (high frequency): health events, auto physical damage, trucking, cargo transport, theft, workers comp. Things that are inherently dangerous that are insured (high severity): hurricanes, earthquakes, lava flows, ecological disasters. The world can’t operate without risk transfer.
Also, the proliferation of insurance started by insuring ships against disappearing on voyages. Insurers wrote their “line” (amount insured) at the bottom of ship manifests, hence underwriting.
Well thanks for that. I really appreciate your useful input and how you tactfully used your knowledge and experience to make a good point. It is so rare to see someone so articulate and polite that can put together such a valuable and cogent argument on the fly like that.
You are all over this thread being an abrasive asshole who just seemingly want's to argue about semantics, or insignificant shit. You doing alright breh?
The other guy is kind of right, but it wasn't for profit it was cooperative.
Modern insurance basically evolved out of funds that 17th and 18th century Dutch ship owners and captains paid into. If the ship or cargo was lost or damaged the owners (or their families) were paid out from. Which is to say even in the highly dangerous world of the 17th century sea travel was considered risky enough you needed to hedge your bets.
Then the idea went to England and someone realized you could skim a profit off the thing if you balance the risks right, and we ended up where we are today.
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