The profusion of insurance ads flooding the airwaves illustrates the amount of money to be made by doing nothing other than collecting premiums and arguing over payouts. Ads for pets, life insurance, funerals, car and household insurance, in fact you can insure just about everything in order to have that warm glow of peaceful serenity to stave off a possible ruinous payout for an unforeseen accident… providing you have previously navigated the fine print.
This is how the bastards do it: First establish the average payout. Then make the excess just below that amount. Establish a “no claim” bonus and then start collecting the money. It’s foolproof, and if government legislation ever insists that you be socially responsible, pack your bags, close the company and start afresh elsewhere.
For example, it cost $25,000 PA to insure my Jetranger helicopter. The excess on any claim is $23,000 so clearly any repair cost below that amount I need to pay for myself. The average bingle in this chopper costs around $23,000, but most accidents are much smaller and must be paid for by the client.
Okay, so when a more serious accident repair costs, say $26,000, I need to pay the first $25,000 and claim the other $1,000 from the insurer. But hang on, if I claim that $1,000 then I lose my no claim bonus, so naturally I pay for the lot. Despite paying a $25,000 insurance premium yearly it has now cost me a total of $51,000 as a result of being insured.
Naturally I no longer have a chopper.
Insurance companies rely on these averages over time for their massive profits. Therefore if you choose to rely on averages too, and refuse to insure anything, the profits/savings will be yours and not the insurance company’s.
President Trump is currently underwriting (insuring) America’s Obamacare insurance companies with billions of dollars in taxpayer funds. He is desperately trying to decrease their premiums while at the same time maintaining their excessive profits to prevent them shooting through.
So let’s pretend there were no insurance companies… maybe insurance was against our religion or something. Would our NDIS or Obamacare or Trumpcare cease to exist? Not necessarily!
It’s possible to leapfrog the insurance companies and simply deal with the IRS, or in our case the ATO. The fact is that someone must pay for the eventual cost. So why allow the middlemen (insurers) to cream the system of billions when saving money for the client is at a premium, and at the same time we can ensure the cover is viable?
The over-staffed IRS and ATO could operate a simple computer program that made the adjustments through monthly income tax and/or entitlements. High earners pay more, poor people pay less… that is what governments want to achieve anyway and that’s the way it will always end up.
Payments up front, refunds, rebates, concessions, no claim bonuses etc could be made from internal revenue or a sequestrated super fund that pays bills directly to the medics and hospitals or refunds to the client.
All costs are returned or adjusted via the taxation office back to the citizens who can now ignore the insoluble Obamacare and NDIS mess.
Everyone gets paid, everyone can get medical attention, (as they would anyway) and the government has complete control of hospitals’, medics’ and ancillary costs.
No underwriting of insurance companies for billions and the billions in profits they would otherwise make are now returned to the taxpayers or the tax office.
Suddenly insurance companies are unneeded and disappear, Obamacare and the NDIS become economically feasible and the rapacious insurers can go flog fake watches on a corner somewhere.
If you believe in averages then you shouldn’t believe in insurance.