Has insurance become a scam

[AdamP88]

Ok. I know this isn’t a spiritual or religious topic but I feel that there is an ethical element to the topic. Also bear in mind that I’m coming at this from an Irish perspective so it may be slightly different in the USA.

I guess I’m just sick of paying for insurance products that are very expensive, and then when you call to avail of cover in some way, they literally try to provide you with the minimum they can get away with.

It’s a huge burden on families, especially ones with many children.

It’s the same from car insurance to health insurance. Very expensive for very little return.

I don’t think companies need to charge this. It’s just driven by greed.

 

[TheLittleLady]

Not so much greed as profit. Businesses exist to make a profit for the owners/shareholders.

You do have a two tier system for health coverage, right?

 

[Allegra]

Yes. The business model for an insurance company is to get as many customers paying in as possible, even using the force of government coercion to do so, and then do everything they can to avoid paying out their part of the agreement. It is a scam and it is immoral.

 

[Allegra]

A legitimate profit is earned by providing a product or service. An insurance company takes your money and then does everything within it’s power to avoid providing the service it agreed to provide.

 

[AdamP88]

Not so much greed as profit. Businesses exist to make a profit for the owners/shareholders.

They aren’t mutually exculsive. They’d still make profits if their products were more affordable.
Example: my car insurance was €900 this year. That covers me if I have an accident but there is also an excess of 500. That is another nonsense thing. What’s the point of an excess? The only point is to help these companies make more millions. It should be illegal.

The amount of people who claim will never be close to the figure of the amount that actually pay for a policy in any given year. (Barring, of course, some natural disaster or catastrophe. But that’s unlikely in Ireland.)

You do have a two tier system for health coverage, right?

Yep. There’s a public system which means it’s not completely necessary to have health insurance, but you might be waiting longer for treatment.

Most people do have private health insurance though. Problem is that unless you have a more expensive plan it’s hit or miss as to whether you’ll be covered when you get sick. Many plans also just don’t include any kind of dental cover at all.

I do believe in having insurance because when it’s really needed it’s good. The issue is that insurance companies seem very happy to deal in a manner that is verging on dishonest, if not actually actively deceitful.

I’m not one for saying that the government should regulate things, but this industry is one thing the government need to regulate. Especially forms of insurance that are required by law like car insurance. You can’t make a law saying that insurance is mandatory and then leave it all up to private business to completely provide this product without government oversight of some kind.

 

[TheLittleLady]

Example: my car insurance was €900 this year. That covers me if I have an accident but there is also an excess of 500.

I am opposed to car insurance once a car is paid off, but, the government requires it.

You can’t make a law saying that insurance is mandatory and then leave it all up to private business to completely provide this product without government oversight of some kind.

Thing is, at least in the US, the insurance lobby is very powerful and can sway legislation as they see fit.

 

[AdamP88]

I am opposed to car insurance once a car is paid off, but, the government requires it.

(Please Note: This uploaded content is no longer available.) AdamP88:

I don’t oppose the requirement for car insurance on principle but I do think the government need to control the prices to some extent.

Thing is, at least in the US, the insurance lobby is very powerful and can sway legislation as they see fit.

Yeah, maybe not to the same extent here but there is still a bit of that. There is a push at the moment to regulate the sector but Irish politicians are notoriously incompetent and it will probably take years. Unless the EU makes some kind of regulation in the matter.

 

[Allegra]

What does it matter if the car is paid off? The law in my state only requires you to carry insurance that protects whoever you hit. And if you’re rich enough to do so, you can get an exemption by keeping a special account of a certain amount of money that is only used to pay out to victims of your vehicular negligence. This saves money because you only have to have that amount once and you can pull it out if you decide to get the insurance. You don’t have to keep paying more and more each year. Of course, most people don’t have the required amount of money sitting around.

 

[JimG]

I think that people would be generally better of to pay insurance premiums to themselves, then invest that money to use to pay what insurance would have paid—health care or auto repairs, for example. If you total up the amount of insurance premiums you paid in a lifetime compared to the amount of benefits received, it’s usually a net loss. Also, insurance by its existence tends to increase prices, because it guarantees more customers for health care workers, hospitals, auto mechanics, etc. Whenver a third party is paying the cost of an item, its usage increases, and its price increases.

Catastrophic insurance with a high deductible would be a better option.

 

[TheLittleLady]

What does it matter if the car is paid off?

Because until I own the car, I am responsible to the entity/person who loaned the money. They did this with the car itself as guarantee of the loan, so, if there is an accident justice requires them to have a way to recoup their loan.

 

[AdamP88]

Because until I own the car, I am responsible to the entity/person who loaned the money. They did this with the car itself as guarantee of the loan, so, if there is an accident justice requires them to have a way to recoup their loan.

In Ireland most people buy their cars outright so this isn’t as big a thing. Though PCP and HP are gaining traction here. Personally I’ll never do that as I feel it’s better value to buy a few years old car outright and drive it til it falls apart than be beholden to a finance company.

 

[jlc2k2]

One thing to remember is that a business’s expenses aren’t limited to the goods you receive. I’m not saying that insurance isn’t often exorbitantly high. It is. But they can’t just charge how much they expect to pay you. They have to cover their operations costs (people to process applications, people to process claims, electricity, cars for their claims adjusters, fuel for those cars, fraud budgeting to cover those who take advantage of the system, ops costs for those people, etc etc). So you can’t just say that they paid you $400 so you overpaid by $500. There’s more to it.

 

[Allegra]

Right, but that could be an agreement between you and the loan holder. The point of the state requiring insurance is to protect the public from your dangerous drivers, not the lenders’ investments.

 

[Allegra]

I think its generally understood that the insurance company has costs and legitimately wants to make a profit. I don’t personally have a problem with the premium. What I have a problem with is their unjust attempts to get out of paying out according to their contracts.

 

[AdamP88]

I understand that they have expenses and they need to make a profit in order to operate. But in Ireland right now the companies are resisting any attempt to lower premiums and blaming the huge cost on fraudsters. Yet many of them declare profits year after year in the hundreds of millions.

As I said, in insurance you are most likely not going to make a major claim in any given year, that means that you represent a profit to that insurance company. I’m not really complaining about the premium as such, though I do think right now in Ireland motor insurance in particular is a rip-off. My real issue is that you pay for a product that you probably won’t use and then there are all sorts of things to make it almost not worth it. Excess, lack of windscreen cover or breakdown cover in specific circumstances, questions about your mileage in a given year to allow them to get out of paying up. etc.