Should the Insurance Industry be Legal?

Should the Insurance Industry be Legal?
By
David Schlecht

I’m guessing you’re finding this question rather odd. But, think about it and it only makes sense. As I wrote in an earlier post, the one legal requirement of a corporation is to make money, not provide services.

Why would we want to put money into an insurance pool knowing that the pool’s primary purpose is to make profit and if it can find a way to disqualify me, it must do so by law, regardless of whether it’s moral or fair or even correct?

Think about the concept of insurance, for a moment. Insurance is a way for a very large number of us to  pool a small amount of money from each of us to help cover the catastrophic costs of one of us encountering an unforeseen or unexpected condition.  In layman’s terms, it’s all about spreading the risk out to a large enough pool that it doesn’t cost much to insure compared to the cost of disaster.

Now, if it’s just a bunch of people all pooling our money together, then it’s really insurance. On the other hand, if it’s a bunch of us giving our money to an insurance company then it’s a gamble whether we’ll actually get paid, or get disqualified.

You know, come to think of it, insurance is the fundamental purpose of a government. We have national military because we can’t all afford to hire our own little militias and certainly can’t afford a big military, so we pool our money and put it into a military that protects us all. That’s insurance.

How about our police force? Same thing isn’t it? We can’t all afford to hire the Pinkerton Detectives to protect our homes, so we all pitch in a few dollars a week and pool it into a police force that insures all of us, yes, even the greedy who are so opposed to people helping each other. Okay, one more example, how about our fire departments? Aren’t they really insurance? Of course they are.

Now, what happens when we put a corporation in between us and our pool of money? Well, like in the days of old, the fire department will drive to your burning home and see if you’re a paid subscriber and if not, then just drive right on by. Hopefully the company you are paying isn’t far behind. And, hopefully your neighbors have been paying their fire company or your neighborhood will soon look like Somalia and your property value will look about the same as well.

I’m not recommending that our government should run all our insurance needs. Not by a long shot. Some, certainly. I am, however, suggesting that we should make it illegal to make a profit running an insurance company (and yes, that includes fire companies, etc.). Non-profit organizations will spring up all over the country to fill the void.

And, now we’re going to have to look at the abuses we’re seeing in non-profit companies where the CEOs and Boards of Directors are bringing home greedy compensation packages. But we already have laws against that so it’s not too hard to fix it, just start enforcing the laws.

Should greedy insurance companies really be in charge of distributing our money as they see fit?