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View Poll Results: thoughts on insurance
the point of insurance is to spread cost around
35.71%
the point of insurance is to spread risk around
64.29%
Voters: 14. You may not vote on this poll

Insurance: Spreading Cost or Spreading Risk?

Old 03-19-10, 11:20 PM
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Insurance: Spreading Cost or Spreading Risk?

what's your thoughts on insurance?
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Old 03-20-10, 12:03 AM
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Re: Insurance: Spreading Cost or Spreading Risk?

The only risk it spreads is the risk of losing money, and that is cost. It doesn't spread the risk of something happening. You could actually look at it as increasing risk if the insured engage in more risky behavior since they're insured.
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Old 03-20-10, 05:12 AM
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Re: Insurance: Spreading Cost or Spreading Risk?

"Yeah, you better give me the insurance, because I am gonna beat the hell out of this car."
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Old 03-20-10, 05:19 AM
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Re: Insurance: Spreading Cost or Spreading Risk?

Originally Posted by Cheato View Post
"Yeah, you better give me the insurance, because I am gonna beat the hell out of this car."
Good reference.
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Old 03-20-10, 10:57 AM
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Re: Insurance: Spreading Cost or Spreading Risk?

It depends on definitions here and we are in danger of semantics. Risk of what?

It does not spread out the risk of something happening. Getting insurance does little to affect or spread out that risk.

It does spread out the risk of financial ruin. But since that risk is a cost (purely financial), it's more fair to say that costs are spread out.

You don't get insurance because you might get cancer. You get insurance because if you get cancer, cancer costs money.

In other words, the only risk it spreads out is the risk of a bill. That bill is a cost. However, in seeking insurance, clearly we do it not to save money or spread our money around, but because we know we are at risk... which might lean people towards the "risk" answer. But as long as we acknowledge that the risk is a financial one, the question is moot. Both are part of the same equation. It's your risk of cost.

Last edited by Th0r S1mpson; 03-20-10 at 11:03 AM.
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Old 03-20-10, 11:34 AM
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Re: Insurance: Spreading Cost or Spreading Risk?

another way of phrasing what I wanted to say:

Do people buy insurance because they want someone else (an insurance company) to assume the financial risks associated with bad events happening? (what I meant by spreading the risk)

or

Do people buy insurance so that the cost of something bad happening to other people will be more managable (what I meant by spreading the cost)

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Do people buy insurance primarily for selfish reasons (ie, don't want to go bankrupt if something bad happens) or do people buy insurance primarily for altruistic reasons (ie, your premiums go to people who really need it)?
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Old 03-20-10, 12:03 PM
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Re: Insurance: Spreading Cost or Spreading Risk?

I don't know of a single person who buys insurance for altruistic reasons. That isn't the motivation, but I see where you are going with this.

In the end, the motivation of the purchaser is, again, only part of the equation. So picking one or the other as "the point of insurance" is a bit silly. It's not one or the other.

Is the point of a restaurant to eat, or to make money and provide jobs?

People go to a restaurant to eat, but a restaurant does not exist to feed you.

Last edited by Th0r S1mpson; 03-20-10 at 12:05 PM.
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Old 03-20-10, 01:00 PM
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Re: Insurance: Spreading Cost or Spreading Risk?

Originally Posted by RoyalTea View Post
another way of phrasing what I wanted to say:

Do people buy insurance because they want someone else (an insurance company) to assume the financial risks associated with bad events happening? (what I meant by spreading the risk)

or

Do people buy insurance so that the cost of something bad happening to other people will be more managable (what I meant by spreading the cost)

The former, obviously. Giving a damn about someone else smacks of socialism.
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Old 03-20-10, 01:38 PM
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Re: Insurance: Spreading Cost or Spreading Risk?

Originally Posted by X View Post
The only risk it spreads is the risk of losing money, and that is cost. It doesn't spread the risk of something happening. You could actually look at it as increasing risk if the insured engage in more risky behavior since they're insured.
I disagree. Insurance premiums increasing due to loss experience often prompts firms to practice better risk management. Also, insurance companies encourage risk management through pricing structures. At our company, we heavily surcharge youthful drivers and drivers with violations, accidents and convictions (past DUI, leaving scene of accident, et al). This encourages insureds to hire drivers who are less likely to get in accidents. Good insurance agents also give risk management advice in the process of servicing their clients. The FHWA also gives ratings based on out of service violations and driver violations for companies with federal fillings. Many auto insurance companies partially base rates on those ratings and violations.

This is not limited to commercial auto insurance. General Liability insurers do may of the same risk management things. I am sure home and other property-casualty companies work in a similar fashion.
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Old 03-21-10, 12:48 PM
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Re: Insurance: Spreading Cost or Spreading Risk?

Originally Posted by Lemmy View Post
Insurance, as it runs now, is bunk. If, at the end of your insurance coverage period, you could be refunded a substantial portion of your premium (let 'em invest it if they wanna make more, fuck 'em), I wouldn't be against insurance.
Insurance is assumption of risk. You pay an insurance company premiums, they assume risk. If nothing bad happens, you still paid for and received a service.
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Old 03-21-10, 01:14 PM
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Re: Insurance: Spreading Cost or Spreading Risk?

It transfers risk from the insured to the company that has insured them.
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Old 03-21-10, 02:48 PM
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Re: Insurance: Spreading Cost or Spreading Risk?

"Unless we put medical freedom into the Constitution, the time will come when medicine will organize into an undercover dictatorship to restrict the art of healing to one class of men and deny equal privileges to others; the Constitution of the Republic should make a special privilege for medical freedoms as well as religious freedom." - Benjamin Rush, MD., a signer of the Declaration of Independence and personal physician to George Washington and other Founders/Framers
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Old 03-21-10, 04:42 PM
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Re: Insurance: Spreading Cost or Spreading Risk?

Originally Posted by Dr Mabuse View Post
- Benjamin Rush, MD., a signer of the Declaration of Independence and personal physician to George Washington and other Founders/Framers
That would certainly be news to Dr. James Craik...but please, continue.
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Old 03-21-10, 04:50 PM
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Re: Insurance: Spreading Cost or Spreading Risk?

That may be the first Rush quote in this forum that wasn't completely ridiculous.
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Old 03-21-10, 06:11 PM
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Re: Insurance: Spreading Cost or Spreading Risk?

Originally Posted by Lemmy View Post
Thanks very much for this, Doc. I had no idea!

He forgot the end part:

Unless we put medical freedom into the constitution the time will come when medicine will organize into an undercover dictatorship and force people who wish doctors and treatment of their own choice to submit to only what the dictating outfit offers.
You're against the state licensing of doctors?
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Old 03-21-10, 08:19 PM
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Re: Insurance: Spreading Cost or Spreading Risk?

Originally Posted by Lemmy View Post
Insurance, as it runs now, is bunk. If, at the end of your insurance coverage period, you could be refunded a substantial portion of your premium (let 'em invest it if they wanna make more, fuck 'em), I wouldn't be against insurance.
There are insurance companies that do that. Some lower your deductible if you go so long without an accident. Others (mostly Mutual companies) refund actually $$ if they end up taking in to much money.

But I guess your talking health...yea that doesn't happen...lol
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Old 03-21-10, 08:20 PM
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Re: Insurance: Spreading Cost or Spreading Risk?

Originally Posted by Lemmy View Post
I'll take the risk myself, sans the gouging, thanks.
It's called self insuring and is another form of risk management. It is certainly an option. Tho not realistic for most.
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Old 03-21-10, 08:23 PM
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Re: Insurance: Spreading Cost or Spreading Risk?

Originally Posted by Lemmy View Post
we allow ourselves to be brain-washed into paying for something that is so incredibly profitable that it owns our political system. Why doesn't insurance cover birth control?
We have been down this road before. The Health insurance industry is not "incredibly profitable". Especially in comparison to other industries.
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Old 03-21-10, 08:59 PM
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Re: Insurance: Spreading Cost or Spreading Risk?

Originally Posted by Sdallnct View Post
We have been down this road before. The Health insurance industry is not "incredibly profitable". Especially in comparison to other industries.
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Old 03-21-10, 09:20 PM
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Re: Insurance: Spreading Cost or Spreading Risk?

Originally Posted by Dr Mabuse View Post
Glad you found it funny. Not sure what that means or what it adds. Or even if your disagreeing. Remember I said health insurance companies, not drug companies, Dr's or hospitals.
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Old 03-21-10, 11:02 PM
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Re: Insurance: Spreading Cost or Spreading Risk?

Keep in mind that "spreading the risK" is generally only part of the equation. It is usually "spreading the risk among similar exposures".

For example, in auto if you were truly spreading the risk, a new 16 year old driver would pay the same as a seasoned 40 year old driver. Yet the spreading of the risk is that all 16 year olds pay the same.

Same with life insurance. Spreading the risk would mean a health 22 year old would pay the same as a 72 year old. Obviously that's not the case.

Now if your in a higher group, you want to spread your risk, but you don't want to accept other risks. For example, those in Florida want companies to spread their risk of hurricane across the country. What they forget is then they would have to "accept" the risk of forest fires in California and the 15 times a year is hails in Texas, Oklahoma and Kansas.
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Old 03-22-10, 12:31 AM
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Re: Insurance: Spreading Cost or Spreading Risk?

Originally Posted by Lemmy View Post
I've said it before, and I'll say it again: if only the upper classes can afford to stay healthy under the current system, what good is it? None. Absolutely none.
Not sure I understand this....85% of America is upper class?
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Old 03-22-10, 03:03 AM
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Re: Insurance: Spreading Cost or Spreading Risk?

Originally Posted by kvrdave View Post
Not sure I understand this....85% of America is upper class?
Compared to the rest of the world... yes.
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Old 03-22-10, 03:17 AM
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Re: Insurance: Spreading Cost or Spreading Risk?

Originally Posted by Jason View Post
The former, obviously. Giving a damn about someone else smacks of socialism.
No, giving a damn about someone else smacks of socialism.

Forcing others to foot the bill for your altruistic attitude smacks of socialism.

The irony being that those who complain loudest about having others' morality forced upon them are those who are most eager to force their own morality upon others.
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Old 03-22-10, 12:11 PM
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Re: Insurance: Spreading Cost or Spreading Risk?

Originally Posted by Lemmy View Post
I'll take the risk myself, sans the gouging, thanks.

It's a shame that in America, we are so money-oriented that we refuse to see the benefits of systems like Canada and England have; we allow ourselves to be brain-washed into paying for something that is so incredibly profitable that it owns our political system. Why doesn't insurance cover birth control? Because a new sucker is born every minute.

I've said it before, and I'll say it again: if only the upper classes can afford to stay healthy under the current system, what good is it? None. Absolutely none.
I sure hope you don't think this way about property/casualty insurance. Or more accurately, I feel bad for anyone you cause financial harm to.
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