Insurers continue scamming businessowners AROUND THE WORLD!

[Alex Eisenhut]

Louis's latest rant is great.



I can't believe people defend insurance companies that they "have bills too."

I am surprised Louis didn't mention the very real fact that insurance companies are themselves insured, and do not lose a penny. Ever.

https://en.wikipedia.org/wiki/Reinsurance

[Nominal Animal]

I only wish he had emphasized that the insurance scamming can only continue for as long as the majority defenders – bootlickers, Louis calls 'em – let them.

To fix this, the rules need to change.  And that will not happen until the majority agrees the behaviour is a problem, and that the rules need to be changed.  We can't change the insurance companies without changing the rules they operate under.

Put another way, it is the insurance marketplace that currently allows this.  Even if you had a company that did not scam its clients, it would soon be out-competed by the scammers, because of the current insurance marketplace rules.

The true villains are not the companies that play by the (too loose) rules, but the wonky rules, and especially the bootlickers that defend the too loose rules: the majority that accepts the current status quo, the "middle of the road" moralists, who do not see anything wrong in the current situation.  (I very recently had a nasty rant about exactly that kind of people in another thread in this forum.)

[Red Squirrel]

Insurance companies seem to hate small business.  Try to run any kind of business from your garage and see what they say.  Heck, some insurance won't even let you put a business decal on your personal car.  Cities equally hate small business too and will give you lot of trouble for it.

I see the odd ball small business ran from a home sometimes and they have a sign and everything and I do wonder how much trouble the city and insurance give them.

[BrianHG]

Pandemic insurance is bullshit.  When a real pandemic comes along, the insurer would have to pay every single one of their clients all simultaneously.  Even the re-insurers cannot afford this and they know it.  Every insurance company should be out of business within months, especially since by definition a pandemic will disrupt things for a good 2 years at least for many businesses.  The insurance company cannot afford to pay everyone all their business expenses country or world wide for 2 years straight...

[langwadt]

Pandemic insurance is bullshit.  When a real pandemic comes along, the insurer would have to pay every single one of their clients all simultaneously.  Even the re-insurers cannot afford this and they know it.  Every insurance company should be out of business within months, especially since by definition a pandemic will disrupt things for a good 2 years at least for many businesses.  The insurance company cannot afford to pay everyone all their business expenses country or world wide for 2 years straight...

so it is fraud, they promise something can't and have no intention of delivering?

[Nominal Animal]

Natural catastrophe insurance is an excellent example of the practice.

If the catastrophe is once-in-a-century event, the company claims it was an Act of God, exempted in the fine print.
If the catastrophe is more common, the company claims it was normal, expected weather, and any damages are due to improper preparation for expected weather, and not a natural catastrophe as outlined in the insurance contract.

It does not matter if the insurance company cannot describe any event that the insurance would have covered.  It can, quite legally, argue both the above points as alternative defenses.  Because law is neither logical nor subject to common sense, this is legal: after all, there is always the possibility of a particular situation under disputed coverage to be neither, it's just that this time it is either-or.

Guess how I know?  (No, not myself; my parents.)

This is legal because it is not made illegal.  It is the same reason as why the biggest companies pay next to no taxes: they aren't forced to, so they just don't.

[Alex Eisenhut]

As you get older you discover that most promises made by people who take your money upfront are bullshit.

[Nominal Animal]

As you get older you discover that most promises made by people who take your money upfront are bullshit.

There, I fixed that for you.

[tom66]

Insurance ONLY ever makes sense for infrequent events that would be hard to defend against.

For instance, your house burns down.  You lose $300k.  But on 'average' houses do not burn down and so your premium might only be $500 for the year.    The insurance company pools together the risk of all of their clients and one might occasionally have to make a $300k claim. The exception is if you live in a wildfire area of course, but that's the 'cost' of living in an area like that, and insurance is not an appropriate product.  (Not living there is unfortunately the only way around this!)

Insurance companies absolutely can and do lose money on policies,  for instance one car insurer in the UK    had to pay out over £50mn for the Selby rail disaster as their client went off the motorway and onto active rail tracks derailing two trains in the process.  They were liable for the first £25mn, with the other half covered by their reinsurer.  That could easily make the accounts red for that year, it isn't a particularly profitable industry.

Too many people think insurance companies can vest money from nowhere.  It is no more a 'scam' than your bank only giving you 0.1% interest rate on your money but you are able to get 8-10% if you chance it right on the stock market ... you are paying someone else to make the effort for you.  The money doesn't exist for wide-scale pandemic insurance, because the premiums would cost almost as much as the benefits as the risk is not poolable.

[SilverSolder]

[...]
Insurance companies absolutely can and do lose money on policies,  for instance one car insurer in the UK    had to pay out over £50mn for the Selby rail disaster as their client went off the motorway and onto active rail tracks derailing two trains in the process. [...]

In the US, there is an explicit cap in the auto insurance policies that limit this kind of exposure.  It can be as low as $100K.  I'm surprised that isn't the case in the UK?

[Red Squirrel]

Something like pandemic insurance should be a government thing, and it should just be something that's there by default, for example there needs to be a plan of what to do if there is any kind of disaster where you have to force people to not be able to work or run their business.

I think a good start is to simply write off costs of living for that period.  If you tell people they can't work and they can't get paid, then write off all their costs of living.   Property taxes, rent, hydro, gas, insurance etc...  everything is just written off.  You don't make money but you don't lose money.  You may have to cancel things that are not required to live like cable TV or whatever but at least the bigger costs would be covered.   This would apply to land lords too, they don't need to pay their taxes or their hydro etc.    The burden would fall on municipalities (no tax income) and utility companies, but they have tons of money to ride it out, the people, not so much. Most people live pay cheque to pay cheque due to costs of living always going up.  The government could then have a long term plan to pay back those companies over a longer period with a fund that would have been already setup for that.  Basically it needs to be setup in such a way that in the end, nobody loses money and nobody is forced to go bankrupt.

So many for sale and for lease signs downtown where I live.  All the businesses that were forced to close at the start still had to pay their extremely high tax rates and utilities etc and a lot of them had to close within a week.   In the end, that means more people that need to go on welfare etc long term even once all this is over, so it actually ends up costing the government more.

[tom66]

In the US, there is an explicit cap in the auto insurance policies that limit this kind of exposure.  It can be as low as $100K.  I'm surprised that isn't the case in the UK?

No, it isn't the case, and the US is actually fairly uncommon in this respect.  The Road Traffic Act which covers mandatory insurance sets no limit on liability for injury or death, and typically no lower than a £20 million limit on property.  That is, an insurer can be theoretically liable for any damages without any limits if a car led to the death or injury of hundreds - in the Selby case 10 were killed and 82 were injured, some very seriously.

$100k really isn't that much money - life long disability caused by a serious accident could easily exceed that. 

[Ground_Loop]

Yes insurance companies do lose money. In fact many went out of business covering hurricane losses in Florida.

[james_s]

Insurance companies are evil. Really what it comes down to is a form of gambling. You are gambling that the payout in the event of a catastrophe and the peace of mind you (perhaps falsely) get by being insured is worth what you pay in premiums. The insurance companies are gambling that the amount they pay out in claims will be sufficiently less than what they collect in premiums. If you do use the insurance, it's a lot like a loan to cover an unexpected loss, you end up paying it back and then some eventually. The more clients use the insurance, the more the rates increase.

[Nominal Animal]

Insurance ONLY ever makes sense for infrequent events that would be hard to defend against.

It is actually the literal opposite.

Insurance only makes sense for events that occur fairly frequently across the entire population, making them statistically predictable.
Then, it is not a matter of gambling whether a covered event occurs, but simply balancing the payment pool and coverage.  Individual events occur so often that it no longer is cost effective for the insurance company to fight every claim in court.

This works fine as long as the insurance company behaviour is controlled by simple rules.  For example, denying coverage because the payment pool is depleted, must not be allowed.  If it is allowed, then there is zero business risk for the insurance company.

It is exactly the rare and devastating situations where insurance companies scam their clients, because that's where it makes financial sense.  They do not do it because they are evil, they do it because it is allowed and they make money that way.

I repeat.  If you want to change this, you do not fight insurance companies.  You fight the people, the status quo supporting majority, and convince or force them to change the rules.  When those people see the real-world effects, but refuse to change the rules for a more just world, those are the true evil.  Not the ones who play by the rules already set; but those who allow injust rules to remain.

[Ground_Loop]

Keep in mind that the premiums paid to insurance insurance companies don't just sit around waiting for things to happen. They get invested and become the source of capital for many industries including new businesses, roads, bridges, airports, etc.  So, play the game and invest in insurance companies. Its historically proven to be a safe bet.

[Alex Eisenhut]

[Nominal Animal]

Keep in mind that the premiums paid to insurance insurance companies don't just sit around waiting for things to happen. They get invested and become the source of capital for many industries including new businesses, roads, bridges, airports, etc.  So, play the game and invest in insurance companies. Its historically proven to be a safe bet.

Isn't that just another way of saying "don't take an insurance, because the insurance company always wins"?

My point still stands.

[T3sl4co1l]

I've said for a very long time (like, that I've understood since late childhood give or take) --
There are three perfect businesses:
Taxation
Gambling
Insurance

And in recent years I've come into some doubt regarding the first one...

(Keep in mind the current former-president of the U.S. has even managed to fail at the second one, somehow.  But I think that can be excused as a special case, and I digress.)

Tim

[tom66]

It is actually the literal opposite.

Insurance only makes sense for events that occur fairly frequently across the entire population, making them statistically predictable.
Then, it is not a matter of gambling whether a covered event occurs, but simply balancing the payment pool and coverage.  Individual events occur so often that it no longer is cost effective for the insurance company to fight every claim in court.

This works fine as long as the insurance company behaviour is controlled by simple rules.  For example, denying coverage because the payment pool is depleted, must not be allowed.  If it is allowed, then there is zero business risk for the insurance company.

Well, you're seeing it from the view point of the insurer, but it's roughly the same.

As a homeowner, you don't expect your home to burn down, but if it did, it would be financially devastating.   So you pay a small amount of money to what is essentially a fund, and in the vast majority of cases you never see any of that money back, but you accept that.   No one person could ever 'save' for a fire in such a way (you can't put $500 into your bank account annually in case a fire happens because the fund would never get big enough.)

The insurance company knows on average a home goes X years between a devastating fire and so they can charge you $Y for a house with a rebuild cost of $Z.  And sure they profit from that, although most of their profit comes from investing your premiums into index trackers and the like.  The average car insurer in the UK loses money on the premium (they pay out more on average), but claws it back on the investment.

Is insurance a scam?  It depends on how you look at it.  Things like flood insurance, even then, aren't necessarily a scam because reinsurance covers the possibility of insurers having to pay claims for a large area. 

But for predictable, low cost events, it is.  For instance, mobile phone theft.  It sucks,  but most people can afford to replace their phone, but you can pay hundreds a year for an insurer to cover you anyway.  Car warranties.  Even a £1k bill sucks but, most people could probably afford that if they can also afford to drive.  Those types of insurances are 'scams' because the cost of the policy is relatively high and the payout ratio is also quite high - they are just things you should budget for.

And pandemic insurance just can't exist, just as nuclear war insurance can't exist - the payouts required ($25k per business per month for example?) just are not feasible for even the largest reinsurer.

[Nominal Animal]

It is actually the literal opposite.

Insurance only makes sense for events that occur fairly frequently across the entire population, making them statistically predictable.
Then, it is not a matter of gambling whether a covered event occurs, but simply balancing the payment pool and coverage.  Individual events occur so often that it no longer is cost effective for the insurance company to fight every claim in court.

This works fine as long as the insurance company behaviour is controlled by simple rules.  For example, denying coverage because the payment pool is depleted, must not be allowed.  If it is allowed, then there is zero business risk for the insurance company.

Well, you're seeing it from the view point of the insurer, but it's roughly the same.

I think I understand how you see insurance, and that you don't think we really disagree (and that we're just describing the same thing from opposite viewpoints), but I believe you are missing a crucial point.

Getting an insurance makes sense when the event you insure against would be personally devastating, but across the population is not rare.  Housefires, car accidents, such.

Neither Louis or I claimed those are scams.  We are specifically talking about business insurance, and insurances sold against pandemics, flooding, natural catastrophes, and other such globally rare event, being scams.

But:

And pandemic insurance just can't exist, just as nuclear war insurance can't exist - the payouts required ($25k per business per month for example?) just are not feasible for even the largest reinsurer.

Yet, the insurance companies still sell these.  The scam is that they have zero intention of ever being able to fulfill their end of the contract.

Similarly, business insurances are often scams, because the insurance company has zero intention of paying out when the clauses are actually fulfilled, and instead weigh the payment pool against court costs and possible losses there.  The payment pool is their profit, and their court costs and losses at court are the cost of doing this scam business.  Similarly for every smaller insurance company, when the payout limit is high: Nobody ever gets the high payment without a court case, and that is the scam. The insurance taker is never told that they will be expected to fight the insurance company in court, usually already in a catastrophic financial situation because of whatever the insurance was supposed to cover.

That is the scam. At the face of it, the contract does not match the insurance company intent, and is therefore fraudulent.  It is only allowed, because people like you defend them.

Yes, Tom66.  I am calling you the true evil here.  Perhaps you should consider the real-world effects of your stance.  Just because you know that you cannot expect the contract to be fulfilled at its face value (and that in any case where lots of money would flow the other way, a court case is to be expected), does not make it not-a-scam.

[tom66]

Yet, the insurance companies still sell these.  The scam is that they have zero intention of ever being able to fulfill their end of the contract.

Similarly, business insurances are often scams, because the insurance company has zero intention of paying out when the clauses are actually fulfilled, and instead weigh the payment pool against court costs and possible losses there.  The payment pool is their profit, and their court costs and losses at court are the cost of doing this scam business.  Similarly for every smaller insurance company, when the payout limit is high: Nobody ever gets the high payment without a court case, and that is the scam. The insurance taker is never told that they will be expected to fight the insurance company in court, usually already in a catastrophic financial situation because of whatever the insurance was supposed to cover.

That is the scam. At the face of it, the contract does not match the insurance company intent, and is therefore fraudulent.  It is only allowed, because people like you defend them.

Yes, Tom66.  I am calling you the true evil here.  Perhaps you should consider the real-world effects of your stance.  Just because you know that you cannot expect the contract to be fulfilled at its face value (and that in any case where lots of money would flow the other way, a court case is to be expected), does not make it not-a-scam.

When did I defend such things as pandemic insurance?  I literally stated that they are not possible to fulfill.  You would have to limit the scope to what is covered to the point of being useless.

Regular insurances, like car, house, etc insurance make sense.  It does not make sense to buy house insurance for the risk of you spilling red wine on carpets. Insurers sell these to foolish people,  but that is capitalism,  and they will pay out for the small number of claims that are made,  so if people want to waste their money on that kind of shit, let them. 

As I stated insurance is only for risks that are hard to defend against, that can be pooled in risk.  Pandemics don't count.  And you WILL see exclusions from things like pandemics in insurance policies, just like you will often see riot or civil commotion excluded.  READ THE DAMN CONTRACT!!!  Business insurance is for, say, a burst pipe floods the store and all the merchandise is destroyed.  It is for individual risks that are hard to defend against.   The US Government indemnifies rocket launches for risks above $100 million because no reinsurer would take possibly incredible loss as a risk worth taking (Falcon Heavy coming down over Orlando?  That cannot be insured against.)  Perhaps if the USA had a functional government,  the pandemic response (both economic, social and healthcare) would have been better - but they did not.

You wouldn't criticise someone for buying a VW Polo, when they had 7 kids.  They bought the wrong product for the wrong job.

[cdev]

The situation at the international level with coronavirus is pretty interesting.  This isn't about insurance, it seems, (in this case international treaties and the investor-state dispute procedures often act like insurance, in indemnifying companies against actions by "States")  as much as about who is responsible for a risk which basically all humanity shares.

It seems to me that corporations should share that risk with countries, but they don't always see it that way.  There is definitely an obligation to minimize risk. But ...

"A successful claim of force majeure must fulfill 5 conditions: (i) there must be an unforeseen event or an irresistible force (the ‘triggering event’); (ii) the event or force must be beyond the control of the State; (iii) the event must make it ‘materially’ impossible to perform an obligation; (iv) the State must not have contributed to the situation; and (v) the State must not have assumed the risk of the situation occurring. Each of these will be assessed in turn, except for (v) which is likely to depend on the specific language of particular treaty commitments."




https://www.ejiltalk.org/covid-19-and-defences-in-the-law-of-state-responsibility-part-i/
https://www.ejiltalk.org/covid-19-and-defences-in-the-law-of-state-responsibility-part-ii/

http://arbitrationblog.kluwerarbitration.com/2020/03/30/covid-19-and-investment-treaty-claims/


Does anybody here have any experience as a manufacturer with issues like "force majure" etc.?

[bdunham7]

The US Government indemnifies rocket launches for risks above $100 million because no reinsurer would take possibly incredible loss as a risk worth taking (Falcon Heavy coming down over Orlando?  That cannot be insured against.)

It is insurable and reinsurance is available into the $100 billion range--for a price that nobody wants to pay up front.  That indemnification is really just a subsidy to lower the cost of rocket launches.  The alternative would be to let the launches go uninsured above the limit of a policy that the company was willing to pay for--and that limit is typically determined by the assets of the company, not the potential damage they might do. 

[Nominal Animal]

When did I defend such things as pandemic insurance?  I literally stated that they are not possible to fulfill.

Perhaps I read your text wrong, then; I understood that you meant that because they are impossible, nobody should be stupid enough to fall for them.

It is that stance that is the root of this evil, this scam scheme.  If that is not your stance, then obviously I mischaracterized you, and sincirely apologise for that.

"The road to hell is paved with good intentions." expresses pretty well my point.  Not actively helping stop scammers is the reason why scammers can scam.  It is not the scammers themselves that are evil; they are just opportunists – so perhaps immoral, obviously untrustworthy, and so on – but no evil.  Evil is to see the damage, and to choose to do nothing, to choose to accept it by doing nothing.

(The reason I am sometimes so offensive, is because so much of the evil in the world I have encountered, exists only because statists are unwilling to help stop it.  Because of that, I want to, uh, poke?, those statists, to make them acknowledge the effect of that stance.  That stance, the enablers, are the real evil in this world, in my opinion.)

Regular insurances, like car, house, etc insurance make sense.  It does not make sense to buy house insurance for the risk of you spilling red wine on carpets. Insurers sell these to foolish people,  but that is capitalism,  and they will pay out for the small number of claims that are made,  so if people want to waste their money on that kind of shit, let them.

As long as the plain reading of the contract matches what (statistically, across all clients making that contract with the company) happens in real life, I have no objections.  It's not even capitalism, it is plain healthy competition on a level marketplace.

But that's not what we are talking about here.

We are talking about insurance companies banking on fighting the claims in court, because there is no small claims court or class action suits.  It is no longer a matter of balancing the pool against claims; it is when the companies deliberately bank on fighting every substantial claim, regardless of what the plain reading of the contract says.  And also when a company sells insurance it cannot and will not cover in any situation.

As I stated insurance is only for risks that are hard to defend against, that can be pooled in risk.  Pandemics don't count.  And you WILL see exclusions from things like pandemics in insurance policies, just like you will often see riot or civil commotion excluded.  READ THE DAMN CONTRACT!!!

You didn't watch the video, did you?

You wouldn't criticise someone for buying a VW Polo, when they had 7 kids.  They bought the wrong product for the wrong job.

Right, I would not.  But say you went to a car rental, told them you have seven kids and a wife in tow, and you need a car that can carry all of you.  The agency shows you the paperwork that it is indeed registered to legally carry nine people plus luggage, and you sign the contract.  If they then roll a VW Polo to the door, it is a scam.

That's what we are talking about here.