Insurance: Can we survive with out it?

[Histiletto]

The idea that we can have a buffer against life burdening emergency liabilities was the original reason insurance became a part of our financial portfolios. Now the premiums of insurance per person are surpassing our ablity to afford such a buffer. Is there a light at the end of this tunnel? Are we on the road of having to live our lives before insurance was available on such a grand scale? Would the exorbitant cost of things become less if there wasn't a financial trough to dip into?

[Dr. Shoe]

There was a time when if people tripped in the street they would just blame themselves and walk on. Now they only have to stumble and they litigate. It is the fault of the way that "compensation" is paid out. Usually, there is an element to reimburse out of pocket expenses, an elememnt for "pain and suffering" and then a punitive, kind of like a fine. The litigant gets it all. In my mind, the litigant should only be paid out of pocket expenses and a much smaller amount for pain and suffering. If the person is no longer able to work because of their injuries then the payments should be no more than they actually need to survive, paying someone £100,000 a year is only going to encourage people to sue. Punitives should go into a pot to help people who are injured in situations where there is no one else at fault. The problem is they are making life difficult for the rest of us with spiralling premiums that have to be passed on to the indemnified's customers and the withdrawal of other facilities because the insurers won't cover them. I think the answer is for everyone to have personal insurance with no claim bonuses like you have as a driver. That way you will only claim if you really need to and the circumstances of your claim will be investigated more fully.

[jmc]

The concept of insurance goes well back to Biblical times. There is historical evidence of what amount to insurance policies written in the days of the Pharaohs and even before. Back in those days, insurance policies were written to protect owners against property loss -- buildings, livestock, etc. The concept of life and health insurance is relatively new. As Doc says, the insurance "industry" has become a bit of a racket, professional litigators (a.k.a lawyers) run up exorbitant litigation costs and awards while another group of professional litigators (lawyers and accountants working for insurance companies) fleece the rest of us to finance it through premium charges. All of this creates a situation where we cannot survive in modern society without insurance "products", even though insurance contributes nothing tangible to most of our lives. It seems to be spiraling too, which means there will likely be a crisis at some point in the future where the whole thing comes crashing down. Excessive costs will probably cause the crash.

[Bubba136]

Your legal system at work The lawyers get at le3ast 1/3 of any award.

[HappyinHeels]

This is why retirement outside the United States looks more appealing all the time, maybe for the winter or maybe year-around if the current slide in quality of life continues. For all the insurance policies, regulations, pills for every malady, and a republic seemingly made up of and administered by lawyers, the average life expectancy isn't the longest in the world, the literacy rate isn't the highest. This doesn't mean the United States isn't a great country but it undoubtedly is a greatly STRESSED country because of these pressures placed on it citizens.

[Dr. Shoe]

Yes, but who allowed it to happen? The citizens.

[Puffer]

As an insurance professional, I could say a great deal on this subject, both pro insurance and also to sympathise with those who buy it or need to claim on it. But this is really not the place to dwell on some complex issues with, inevitably, a high legal and technical content. I will say that I am distinctly unhappy with the growth of the compensation culture and the problems that this causes all parties. But it is not just liability insurance that is suffering problems; property and pecuniary insurances (including motor) get progressively more expensive as repair/replacement costs increase and exaggerated if not fraudulent claims (often including manipulated 'accidents') abound. Dr Shoe is a little off-beam in some of his comments. An award of damages is intended to restore the victim to his pre-damage situation as far as this is possible - which obviously involves complex valuation issues when personal injury or death (as distinct from pure property damage) is involved. It is right that pain and suffering and loss of earnings etc are recompensed. In the UK (unlike the US), there are very few situations where punitive (examplary) damages can be awarded and no-one should imagine that victims routinely get a bonus in this way at the expense of whoever caused the 'injury' leading to liability. The Doc may have the clear exception of defamation in mind, where exemplary damages are frequently awarded to 'punish' a publisher for making mega profits out of a high-profile libel (because lots of extra papers were sold). The other main exception is where someone has abused a public office and an example must be made of his conduct; the police are the main offenders (but I would suggest that MPs should be considered also!). One area in which law reform is being considered is that of 'no fault compensation'. This would allow those who suffer loss, damage or injury to claim some recompense even in situations where that arose without being the clear legal liability of anyone else. But someone (whether the state or not) must pay for it ....

[docs41]

I don't know if I have an answer to Dr. Shoe's question as to who allowed this to happen, but one thing for certain greed is a large part of the equation. All sides are at fault, litigants, lawyers, insurance companies and corporations. I don't intend to slight those who have ligitimate claims, but they have been eclipsed by the greed that is rampant in American society. Enough rant...

[roniheels]

I don't know if I have an answer to Dr. Shoe's question as to who allowed this to happen, but one thing for certain greed is a large part of the equation. All sides are at fault, litigants, lawyers, insurance companies and corporations. I don't intend to slight those who have ligitimate claims, but they have been eclipsed by the greed that is rampant in American society.

Enough rant...

I have to concur with this. I believe greed has not only led to the problems with the insurance industry, but the world-wide financial woes has been the result of not necessarily capitalism out-of-control, but unadulterated greed.

[Histiletto]

Like insurance companies, many financial institutions seem to have been overtaken by greed from those who oversee the various stewardships instead of seeing to the well-being of those who are paying the premiums or investing their hard earned income for the products or services being offered. Isn't there a code of ethics and honor along with a conscious when a person obtains a lofty position or are these positions gained only through unscrupulous means of deceit and thinking only of number one? What happened to the idea of customer care to encourage trust and satisfaction so they will want to return and do business? It seems the only reason a business wants to keep their patrons is to suck all the money out of the person who happens to initiate a purchase. A while back I was in an accident that totalled my vehicle. The insurance company that was responsible to make restitution for the fault of its policy holder wouldn't restore my loss to the status I had before the accident. It's doubtful I will ever knowingly join their policied members, because of the unjust dealings they gave me to deal with my loss. They were more concerned with their bottom line, instead of restoring my status of well-being. I'm not oblivious to their point of view, but through their dealings, I have resolved to use legal counsel should I ever find myself in similar circumstances, which will probably cost considerably more than the equality settlement I formerly sought.

[Puffer]

... What happened to the idea of customer care to encourage trust and satisfaction so they will want to return and do business? It seems the only reason a business wants to keep their patrons is to suck all the money out of the person who happens to initiate a purchase. A while back I was in an accident that totalled my vehicle. The insurance company that was responsible to make restitution for the fault of its policy holder wouldn't restore my loss to the status I had before the accident. It's doubtful I will ever knowingly join their policied members, because of the unjust dealings they gave me to deal with my loss. They were more concerned with their bottom line, instead of restoring my status of well-being. I'm not oblivious to their point of view, but through their dealings, I have resolved to use legal counsel should I ever find myself in similar circumstances, which will probably cost considerably more than the equality settlement I formerly sought.

I'm not too clear about your situation, HS. Are you saying that your car was wrecked through the fault of a third party and his insurer has not adequately indemnified you (in your opinion)? If so, you should be taking legal action against the third party, which will be defended (or not) by his insurer. (Yes, it will cost you, but you should recover your costs if you win.) But what about your own insurance - you are surely covered for own damage which your insurer will pay for and then recover (if it can) from the TP?

Why should the TP insurer have any concern for you - its interest is limited to that of its own insured driver and therefore to minimise its loss caused through his fault? Of course it is seeking to protect its 'bottom line' rather than to so impress you that you might seek to buy its insurances in future. Or am I missing something?

A few years ago, my wife had a no-fault accident, with liability admitted by the third party. She had scarcely gathered breath before the TP insurer had phoned her and arranged for her car to be repaired at its expense; she didn't need to claim on her own insurance at all. That service was impressive and she later did transfer her cover there, but only because the premium and other terms were favourable. So, yes, it can happen but my previous point remains - it is the TP interest that comes first. In this case, there was nothing to be gained by denial or delay and the cheapest option for the TP insurer was to pay-up gracefully and thereby minimise its extra and avoidable costs.

[Bubba136]

I kinda agree with Puffer. I've similar experience. Someone went through a stoplight and hit me broadside. My car was a mess. The "at fault" party" readily admitted that he was responsible. His insurance company sent me a check for an amount that was less than half of my own insurance company's estimate for repair. I just sent the check to my insurance company and let them fight it out through legal channels (subjugate?). After all, as my agent told me, that's what I pay them for. So, after my insurance company replaced my car, I never did find out the final outcome of the case. I have a sneaking suspicion that the two companies settle it between themselves without legal system involvement. But then what do I know. I just pay the bill and go on my way -- fat, dumb and happy.

[Histiletto]

The time limit for anymore recovery has long passed. I admit to a bit of ignorance as to what I should have done to get a better settlement. Also, I understood why the TP's insurer didn't do the right thing and fully restore my loss because of the negligence of one of its policy holders. It is still their integrity from my point of view that has been put in question. Of course, who knows what effect my opinion will have on that particular insurance company. I'm only one of meager means and influence, but if they have done it once, most likely it is part of their procedure and there are a whole lot more that have come to the same opinion as I have. Therefore, that insurance business may do a profitable business, but it lacks the honor of treating people fairly because it is more concerned with its "bottom line". Hey Puffer, I'm happy that you and your wife have had better experiences than I had with insurance matters. If I should ever have a claim in the future, I will consider using the resources of my insurance company. Now, back to the topic - Can we survive with out the established insurance system? Has it become more of a parasite than an aid?

[Puffer]

A few points arising from the above:

1. The word you were looking for, Bubba, is 'subrogation'. Your own insurer meets your loss and is then subrogated to your rights against whoever might ultimately be liable for it, i.e. entitled to pursue appropriate legal action in your name and recoup its outlay if it can.

2. It would be unusual for two insurers to go to court over a disputed claim, unless mega-bucks were involved. They will normally settle after a bit of haggling, as of course they should. In motor insurance (at least in the UK), it is quite common for two insurers with similar portfolios of business to have what is called a 'knock-for-knock' agreement between them. Under this, the car's insurer will meet the full cost of repairs even though a third party (with a different insurer) was at fault. The principle is one of swings and roundabouts; next time, the other insurer may be the one to pay up because it insured the car.

3. Yes, HS, you should involve your own insurer (and certainly notify it of the accident) - even though ultimately you may not need to claim on your insurance because the TP does pay up. Any insurer (yours or a TP's) is going to look critically at your claim, especially if you have a write-off (total loss) and want to get the pre-accident vehicle value (i.e. the like-for-like replacement cost). You will likely need to haggle and maybe get expert help (e.g. from a loss assessor or motor engineer) to 'prove' the value. After all, if you were the person liable, you would not pay the first sum demanded without seeing reasonable evidence to support it, would you?

Sorry if this is all a little off-track - but most of us are car owners/drivers and the scenarios are hardly irrelevant, unfortunately. And do keep in mind that (whatever one's personal experiences may be), an insurer stays in business only because it does provide reasonable cover at a realistic premium and meet its claim obligations. You can fool some of the people ...