Insurance companies; I have posted a number of social media rants about the insurance industry in my day, but I want to officially record in this space the total disdain I hold for insurance companies.
I can condense my argument into on simple statement; "It is our fucking money, you assholes, not yours!" This seems to be a concept that is completely lost on the insurance industry.
A bit about the history of the notion of insurance. The first forms of insurance were recorded by the Babylonian and Chinese traders. To limit the loss of goods, merchants would divide their items among various ships that had to cross treacherous waters. One of the first documented loss limitation methods was noted in the Code of Hammurabi, which was written around 1750 BC. Under this method, a merchant receiving a loan would pay the lender an extra amount of money in exchange for a guarantee that the loan would be cancelled if the shipment were stolen.
The Greeks and Romans introduced the origins of health and life assurance in around c. 600 BC when they created ‘benevolent societies’, which looked after bereaved families, as well as paying funeral expenses of members.
Life insurance, as we know it, can be traced to ancient Rome when the military leader Caius Marius created a ‘burial club’ for his troops, so in the event of the unexpected death, other members would pay for the funeral. Other leaders saw this was a good idea, and followed suit. This wasn't just done in the name of decency; the Romans believed that anyone who was improperly buried would become an unhappy ghost. It became essential for each person, regardless of social standing, to be buried correctly. Later, these clubs evolved to provide a stipend to the deceased’s family.
In 1688. Edward Lloyd’s Coffee House, a small shop on London popular with merchants, became the go-to place for shipping news and, eventually, marine cover. It was there that the modern concept of protection was born. In 1769, a group of underwriters formed a splinter group, New Lloyd’s Coffee House. It’s still around today, and it’s known as Lloyd’s of London.
Life assurance continued to evolve as people started to understand the importance of protecting their assets; the economic boom at the end of WW2 boosted sales of life cover. By 1976, 72% of adults and 90% of all married couples in the US all had life insurance, and therein lies a big part of the problem.
Suddenly, the insurance companies are holding, presumably for their clients, billions and billions of dollars in assets. While that money was sitting there waiting for someone to get in a boat wreck or die and file a claim, the thick-eyed green shaded accountants began talking about investing some of that money to make more money. They would basically set aside enough to cover claims based on statistical probabilities and invest the rest to make as much frigging money as they could. And it worked.
But a funny thing happened on the way to become a trillion dollar industry, they made a ton of money but our premiums didn't go down - they went up because the insurance companies were reinvesting their huge profits to get even richer. How rich?
The top ten insurance companies in America had total assets ranging from a paltry $299,000,000,000 ($299 billion) for State Farm to a whopping $940,000,000,000 (almost a trillion dollars) for Prudential Financial. What had started out as an insurance industry became a monolithic financial investment industry.
Naturally, the folks in the industry got very greedy and very protective of that pile of money. They naturally see claims by policy holders as a threat to that pile of money they now consider to be theirs and have made filing a claim and getting your money back when you suffer a tragedy exceedingly complicated and difficult. Your money has become their money in their minds and you are a low-life gold-bricker and miscreant simply trying to get a good payday out of them. Thus, their goal is to deny or engage in prolonged examinations of any claims presented to them.
Unlike banks, who also invest and loan money to make money, and where you can simply walk in, identify yourself and withdraw your money for any damn thing you want to spend it on, when it comes to the insurance industry, you will jump through hoops, be questioned like a suspect in the crime, have to learn a plethora of medical codes and other technical jargon and then most likely wait weeks and weeks for your claim to be approved, assuming they eventually approve your claim. What's with the delay? That money, your money, was in an investment and the longer it stays in the hands of the insurance company, they are making money off of you.
That's why I detest insurance companies. Remember those ancient Romans and Greeks who created ‘benevolent societies’, which looked after bereaved families, as well as paying funeral expenses of members? They have been replaced by CEOs getting paid 8-figures in compensation. In 2018, the top four CEOs were knocking down between $18,000,000, and $24,000,000 in compensation. Does anyone really believe they give a shit about some single mom Iowa with a kid who has cancer and is facing six-figure medical bills? Hell no! Their people are trained to hang on to all that money - your money - so it can continue to pay those outrageous salaries.
I do have to say, there are a few insurance companies that are better than I've described. There are a growing number of non-profit insurance companies covering most types of insurance, health, home, auto, etc. Check with Google and you'll get a bunch of hits. Be patient; don't grab the first one. Our company that covers our home and auto is Mutual of Enumclaw. Much like those ancient Romans and Greeks, it started as a co-op affair. In 1898, in the small town of Enumclaw, Washington, a group of residents joined together to create the Farmers’ Mutual Insurance Company. When bad things happened losses were tallied and each member paid their respective share. It can be done, and it works well and rates are low. The trade-off is that they are tougher on high-risk insurance needs and avoid that risk.
We need better management of how insurance is sold and how it pays out claims, but with the insurance industry lobby wandering the halls of Congress, and making large campaign contributions, don't expect anything to change any time soon. Oh, things like universal healthcare and Medicare For All? Guess who's mucking up the works in getting that done?