Give Us Money And We’ll Go Away

Insurance originated as the pooling of risk between dissimilar individuals, mediated by medieval guilds and 19th-century trade-union burial societies. Early insurance companies were therefore mutual societies. Demutualisation, or conversion to limited companies, was later touted as a search for efficiency, a way of creating larger and richer units that could play with the big boys, but no one seems to have made the obvious point: that members of a mutual society have a disincentive to refuse indemnity for a genuine insurance event, since next time round it will be their turn to make a claim, while the profit to outside shareholders is maximised by taking as high premiums as possible and paying out on as few claims as possible. You now take the money from the person with low risk and refuse to pay out to the person with high risk. Or you take the money from everyone and then refuse to pay out to anyone until they sue you. This is obviously the fastest road to “shareholder value”, which according to the Washington Consensus is the only object of any company. Instead of a large number of people spreading the risks of life among themselves, therefore, we have yet another device to suck money from all of them into the pockets of a small number of third parties. As if there were not enough of those from before. The entire concept of the joint-stock company selling insurance is thus based on breach of contract, false representation, indeed mail fraud and criminal racketeering. What we need is for the entire management of the insurance industry to be arrested in the middle of the night under RICO or national equivalents.

Posted on December 15, 2011 at 12:21 by Hugo Grinebiter · Permalink
In: RESISTANCE IS FUTILE!, Some Modest Proposals

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  1. Written by urban
    on December 16, 2011 at 07:44

    Confiscate the estates! Heads on pikes!

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