I guess Ben Franklin was in on it, but who else helped hatch the idea of insurance? When was it that people sat around a table, perhaps a tankard of ale in hand, brainstorming ideas about how to make boatloads of money and offer a little something to the ones who bought in? Let’s call them policyholders.
That’s what insurance is, isn’t it- a scheme to make money while presenting the appearance of offering a benefit? In a perfect world, pay-outs would be minimal and the benefits one-sided. People pay premiums for decades, for peace of mind and coverage they may never need, while the insurance companies just keep looking for bigger vaults and blimps to buy and golf tournaments to underwrite. Their CEOs spend time with Jim Nance on Sunday afternoons presenting a human face, talking up their altruism and visibility in the community.
It’s based on statistical likelihoods and spreading risk, so it’s quite complicated yet also formulaic. It’s a game for number crunchers and schmoozers, where the bottom line is the bottom line. It’s offered by agents who present a veneer of caring and concern but who are motivated to sell policies that enrich the company and enhance their own financial well-being.
The concept of insurance is great until there’s an accident or an earthquake or a hurricane or a fire or a major illness and these companies actually have to follow through and pay out. Then say hello to higher premiums, or dropped coverage and more restrictive small print.