The Big Insurance Scam
First, I feel it is important to divide the logic behind insurance from society’s current implementation of insurance. It’s important to separate them because I want to make it clear that the reasons behind insurance are wise… and I do not dispute the value of creating a safety net in the form of insurance. The problem lies in the way insurance companies do their business.
The basic concept of any insurance is this. You know that this world is precarious. You know that there are no guarantees for safety in health, finances or any other commodity. You know that many of the factors involved in the continuation of your safety are beyond your control, and even those factors within your control are fallible simply because no one is perfect. So, wherever possible and reasonable, you should fortify yourself in the event of calamity.
In ancient times insurance was carried out in the form of storing grain for winter months. In fact, we still do that… but our minds have long forgotten how precarious harvests are.
The logic behind preparing for unknown disasters is not in dispute. What’s to be disputed is that marketing strategies mixed with political tinkering have not only covered basic truths of reality from many people’s minds, it has also created a system that encourages increases in the cost of several industries. Some of those industries, such as the auto industry, are areas where the average American is forced to pay insurance companies for services they often never use.
The blanket over many eyes is the false security insurance provides. Being prepared for disaster is important… but there is a line beyond which a levelheaded strategist won’t go because the frequency of disasters is so low that paying to defeat a phantom risk is too costly. There are an infinite number of disasters that could happen at any moment… but most never happen because of intelligence and order. If you want to prepare for them all you will end up spending one hundred percent of your time planning to defeat the infinite list of tragedies that could come your way. And then after all that you can have a heart attack and die.
Again, I’m not arguing that being prepared and having a plan to deal with tragedies is wrong. But the insurance companies want you and me to believe that they will protect you from tragedy—when in reality there is absolutely nothing insurance companies can do to protect you from tragedy because they have no bearing on the actions you take in your life. They know that they can’t do anything about it… but they market their services as a form of protection.
Consider auto insurance. A drunk driver slams into you. Insurance had nothing to do with the other motorist getting drunk… or with you being on the road that night. And if you die… there is nothing that the insurance company can do about it.
The logic is then turned to say that you and I need to carry auto insurance to protect other drivers from us. Again… there is no protection. Carrying the insurance does not do anything other than help defray the cost or repairing the damages after the fact of tragedy. Of course this is how it works… but marketing schemes continue to make the insurance seem like a protection from disasters.
Health insurance companies are scams too because they put it into everyone’s mind that we are entitled to living past one hundred years old; they also increase the cost of health care because of the plans that pass covered patients’ bills onto insurance companies… allowing hospitals to charge extortionately higher for medications that would otherwise cost much less. One manual on reducing hospital costs stated “Hospital costs for medications are notoriously high.” One of the recommendations offered (buying these medications with insurance plans) displays the mental block that Americans have with this issue—they assume that they are getting the medications cheaper because of insurance when in reality the practice allows pharmaceutical companies and hospitals to raise the cost of medications and treatments… a cost that is passed back to the insurance companies and then right back into the consumer’s lap.
Some types of insurance companies are even forcing doctors to close shop—as in the case of obstetricians that can’t keep up with the rising premiums in malpractice insurance.
Insurance companies are businesses. They exist to make a profit. There’s nothing wrong with that. But they play a major role in raising the cost of living and in sustaining the increase in cost. Those industries that have snuck through the back door of the legislative process (like auto insurers) have created a monster in the system that is a giant parasite on the American economy—private companies are essentially taxing the American public.
Furthermore, the floor seems to fall out when you consider another fact. In times of major disaster, when a company, family or individual needs the help most—when they really expect all the expense into insurance companies to pay off—insurance companies find ways to fall short on their promises.
One shady tactic of insurance companies is in the fine print of many insurance plans. Oftentimes the consumer was never educated by the insurance companies about lasering, a strategy insurance companies use to limit financial loss by limiting their financial responsibility in costly claims. Lasering allows insurance companies to limit their payments on partially self-funded companies when, for example, the insurance company knows an employee has an expensive illness. See Lasering information.
The recent barrage of hurricanes in Florida is another case in point. Insurance companies struggled to pay for all the damages. Who came in to clean up the mess? The U.S. Government has already spent more than $1.8 billion in aide on Florida. Of course… insurance companies paid their part… Economy in News reported that the hurricanes that hit Florida could cost the insurance industry $50 billion all told. One company, it said, “might even have to dip into its reserves to cover the costs.”
That means a rise in premiums. That means the cost of living goes up. It will go up for the big picture, not just for the home owners of Florida; the cost of the disasters cannot be paid for from the funds pulled from Florida alone—it’s the homeowners living in areas with extremely low chances of disaster that pay a large portion of this bill. In other words… people who don’t need insurance are paying for the tragedies of those who do need insurance.
Entrepreneur.com reported that “small and midsize companies see health-care premiums outpace the cost of their employees’ claims”. The cost is going up… but the services are not.
Tragedy is not something to flirt with. Being prepared to handle it is wise. Requiring financial responsibility among people partaking in hi-risk activities that can harm others is prudent. I don’t recommend banning insurance companies. But I do recommend boycotting most of them and pressuring lawmakers the open their eyes to the cutthroat scams being pulled on the American people by the current insurance industry.
To end, I want to quote from the banker who felt offended by me. He wrote, “Insurance companies never know who the next driver is that may cause a 10 car pile up and cost them $1,000,000. It could be you.” I suppose that’s true. They also don’t know who the next person to steal my wallet will be; when a meteorite will hit the USA again; when a drunken tanker captain will smash into shore again; when a swarm of killer bees will attack a bus full of children; when a rogue politician will start a war.
There are many things that insurance companies don’t know. But there are a few things they know well… like getting your money. See, insurance companies are good at eating the pie and having it too. Actually, they are good at taking your money and keeping it too. The odds are that you’ll never see a return on the “investment” you’ve put into the security of insurance companies.
More in the Insurance Series
- Insurance Fraud: The True Story
- The Big Insurance Scam
- Obama's Health Care Reform
- Search for Politics articles similar to "The Big Insurance Scam.
- Search all articles similar to "The Big Insurance Scam".
- List Politics articles from all authors.
Comments on The Big Insurance Scam
fddf fdf said:
insurance is important in business, especially in goods shipping, and insurence against civil claims. However insurance for physical person's use can be justified only in few cases - e.g. if you live in really disasterous region or you have dangerous work.
Everything else IMO can be covered and will work more effective by creating personal savings account and put aside some sum. The logic is of course simple - insurence companies are very very negative to pay out any money and will find proof that they have no obligations in particular case. If you can finance your own misdeeds, you're safe and don't need to stress about them.
A person should be able to finance for himself at least a month in hospital etc. The situation is different in countries where strong healthcare system is established.
JD Long said:
I have searched and searched for a book I read back in the 80's, entitled "How Insurance Companies Rip You Off, and What You Can Do About It". This was after getting my insurance license so I could sell for A.L. Williams (which is another story). The book was written by a man who had been in the Million Dollar Round Table and became disenchanted with the Whole Life business, due to the inequities in the pay back vis-a-vis the premiums paid. This was a great expose' book. I would love to read it again, but I'm afraid the insurance companies have bought and destroyed all the copies. How's that for a conspiracy theory? I'm really pretty sure the title is right, but I don't remember the authors name. Have you or anyone else ever heard of it? I actually checked it out from the library in about 1982. Now, it's not even in Bookfinder.com. Thanks, JD
Eric Yohe said:
Insurance is organized crime at it's worst. Raise revenue, cut expenses. That is the companies fidicuary responsibility to it's investors. The insurance companies are not in the business of helping people, they are in the investment business. This is the basic problem with insurance. In most cases we are legally forced to buy it. Our premiums are invested to give the company and investors their return. The less they pay out to customers the more return for investors. This is capitalism, and that's great. I'm a business owner, that's how I provide for my family and employees. The difference is, I can't deny my customers service, lie to them about what I'm going to do, or drop them as customers if the use my service. Does that make sense to anyone; pay auto insurance premiums for years, get in an accident and either be dropped or have your rates go up! What other "business" can operate this way and get away with it. Insurance needs to be non-profit or non-mandatory. It is one of the big, sad lies of our society and it's a pathetic shame. If you work in the industry, shame on you. You'd be better off working in one of those "penny stock" boiler rooms, cold calling fools to invest their hard earned money in the latest big deal.
Joe Peden said:
As a motorist in the U.K we are bled white by insurance companies and our government. we need to come together and stand up to this bullying.I would like to know what happens to all our money and why do I have to pay an excess when I already pay them for cover.It is a way of making money that the Mafia would be proud.I say No to insurance No No No,if you work for an insurance company please kill yourself for the good of mankind.
Crooks For Sure said:
Insurance companies are the closest thing to legalized robbery in the states. They force you to get covered or you go to jail? You know what Uncle Sam? Stick a cork in it.
M Moose said:
We have lived with insurance for so long we think it is normal. It is a betting scam where we all have to bet against the house and I think we all know how stupid that is. The insurance companies know all the odds and have all the data. If they are willing to insure you for something rest assured it probably won't happen and if by some wild chance it does you can also rest assured that the fine print somewhere will keep them from paying up. I love the thought of betting that I will die before I'm 75, of course the odds are I won't so they plead with me to protect my loved ones in case something happens to me but when I actually get to an age when the odds are I will die then the coverage is either dropped or reduced to part of the actual amount already paid in. Medical insurance is even worse. If we want to fix our system then insurance reform is not the answer...doing away with insurance is.
Chris said:
News flash for the insurance-lovers out there: INSURANCE COMPANIES WOULD GO BROKE IF THEY PAID US MORE MONEY THAN WE PAID THEM. Insurance should only be used for catastrophic risks. Americans have become so ignorant of this, that companies like GM have been effectively bankrupted by labor that expects ridiculously comprehensive insurance. Insurance should not pay for very likely events - your cavity in your lower left molar, your wife's pregnancy, your yearly checkup. This only increases the overall cost. You used to pay the doctor or dentist for their services, now you pay them AND the insurance company - they all need to be paid. We aren't ahead by including insurance companies into the game for routine expenses. Figure it out, folks.
Ismail Bhai said:
A great article! The whole world is following trend with this insurance crap. Why should anyone else be help responsible for your fate? The American public needs to realize that if they saved the same money that they put in insurance, they would be better off.
Al Liepold said:
I could not say it any better, If I could I would not buy any and take my chance. But the insurenc companies had it made mandatory to by law to carry insurance, by buying politisens. And pass that lobing cost on to me also.
Chaotic lives kept said:
Your article survives the passage of time, always in the limelight and its impact current. It interested me and intrigued me, to the point I felt I should add a few of my responses
"Insurance companies are businesses. They exist to make a profit. There’s nothing wrong with that."
Oh yes there is. There is a lot of 'wrongness' in there. And by not admitting is as dipping your (our) head like an ostrich, not in sand but in a pile of excrement, to avoid seeing it.
WILL HERDMAN said:
THE PART OF THIS ARTICLE THAT IS MISSING IS THE PART ABOUT SCAMING THE AMERICAN PEOPLE ON THE SALE OF INSURANCE WHAT THEY WILL NOT TELL YOU IS MOST LAW FIRMS CAN NOT INTERPET THE POLICIES. IF THE COMPANYS TURLEY WERE IN THE BUISNESS TO PROVIDE A SERVICE THEY WOULD NOT NEED TV ADDS WHEN YOU TAKE CARE OF THE COMSUMER BASE IT WILL TAKE CARE OF YOU BUT ALL CEO BELIEVE SPENDING 65% OF THEIR BUDGET ON ADVERTISING IS GOOD FOR BUISNESS WHEN IN FACT THE AMERICAN PEOPLE PAY THE BILL BOR THESE ADDS ONLY TO MUTR THEM OUT. AND IF YOU SHOULD GET IN A AUTO ACCIDENT YOUR INSURANCE COMPANY WILL NOT BE THEIR TO HELP AND THE LAWMAKERS HAVE PASSED SO MANY LAWS TO PROTECT AMERICAS BIGGEST SCAM IN 1944 THEY PUT A LAW IN PLACE IF A COMPANY FILES CHAPTER 11 THEY DO NOT HALF TO TELL THE POLICY HOLDERS SO GOOD LUCK BE SURE TO SAY HELLO TO THE LAW MAKERS AND WATCH FOR THE NEXT SCAM.
Patrick OMalley Jr said:
Great, Heres my idea; insurance companies must offer a form of profit sharing, ie. straight cash back annually and quarterly, or in stock whatever the policy holder decides, but lets be factual the 1000 bucks you dump on them every year never comes back and thats not getting what your paying for. I buy a house the house is there. There it is. I buy insurance, maybe i never use it. but they say good thing you have it just in case. Its almost like to get my money back I should get a car accident. some people do this by arson. Its criminal but the addition on the back of the house looks pretty good. This payback would help the consumer and spur compitition.. Patrick
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Brian Tye said:
This is actually one of the dumbest articles I have ever read. The auto insurance companies have never said they would physically protect you from a drunk driver. However they would represent you financially. Where did you ever get the idea that they offer physical protection. They aren't god. I do think insurance companies make too much money and profit off of people who rarely use their services. Please get some better logic and examples.
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Aisle Nevertell said:
I work in the insurance industry. I do IT, thus reaping none of the rewards of the scams.
You're absolutely correct. I've witnessed money-grubbing underhandedness of a daily basis.
Bob Fisch said:
Thanks Shawn While i agree with a lot of what you've said i'm afraid you've under estimated the depth of this much deeper matrix scam. you see the insurence co.s take the profits that they reap from americam workers and invest them in other co.s such as pharmicutical or hospitals them selfs then they jack up the price so that it is inposible for you to pay out of pocket so that you must buy their insurance to survive and when you cant pay then they pas the bill along to medicare or medicaid and get the tax payer to foot additional billing thanks to the polititions they pay to pass bills favoring insurance co.s. See thres realy nothing to this free enterprize stuff if you know the right people Good luck -- Bob
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