Is insurance just a big scam?

I guess the world is black and white to some people.

Much of the world is in danger of one or more natural hazards. You’ve mentioned wild fires and flooding. What about earthquakes, landslides, tropical storms, drought, karst sink holes, tornadoes, tsunamis, and so on? If you want to avoid any chance of any physical danger (let alone other types of potential loss) you inoculate a significant proportion of the world’s developable lands, including, in particular, all the more desirable lands.

The easiest solution to this is to not own a home and leave the risk to people who can afford it.

Have you heard of apartments?

1. The obvious - Protection against huge losses that would lead to financial ruin; Or mathematically, positive utility expectation.

2. Information / efficiency in transactions. When dealing with third parties (health, travel, etc) insurance companies will pay much less than you will in the case of a loss, and handle the case much more smoothly.

3. Encouraging longer term conscientious planning. People aren't rational auto-bots. Some $ expected value lost for more confidence and peace of mind is a fair trade-off.

4. Yea 90% of insurance out there, especially for smaller policies are basically scams and not worth it.

- t. actuarylet

Yea, so do you not understand that you pay higher premium for living somewhere that’s riskier? How do you not understand that?

You’re a burden to the society needing this explanation.

honestly, this whole topic is a burden. Insurance is a good idea in case of catastrophic event that can be mitigated with having insurance and pay certain premium.

It's not enough. It's the same reason insurace companies won't insure properties for flood damage on Galveston, in Corpus Christi, etc. It's not financially viable for anyone to live there. The premiums would be 100% of the replacement cost, every few years.

.... UNLESS the government bails out your dumb decisions by rebuilding your house every time the gulf has a hurricane.

If you're curious, full-coverage motorcycle insurance is similarly unsustainable.

With your logic, where are people supposed to live? Where is considered safe? It’s coming to a point that you want socialist society of government telling us where to live.

Even in the midwest, tornadoes are fatal where few months ago, warehouses were getting ripped apart.

can I not live near trees? Bad storm would knock them down and could kill me.

also, weather pattern does change naturally. Where it’s safe now could be vastly different in the future.

Also, I think you’re naive to think that we would all get the savings if people are prevented from living in riskiest areas. With your logic of those places not paying enough in premiums, then how is the insurance going to lower ours that much if they’re not collecting enough premiums in the first place?

also, by your logic, Japanese people would all need to leave their country as the entire country is at risk from earthquakes. What you’re suggesting or wanting is in fact, unsustainable.

Insurance is not a scam. However, some types of insurance are not necessary. There are also bad policies which charge too much for the insured risk or make it difficult to claim. Recognizing insurance in other forms is also important. Some payments or add-ons in retail purchases are really insurance disguised as maintenance, service agreements, warrantees, etc. Electronics retailers and auto dealers are big sellers of these types of insurance where you pay extra, often in installments, to prevent a particular cost or outcome.

A basic understanding of risk and probabilities is helpful to understanding insurance. Lotteries and the COVID pandemic tell us that most people are very bad at both.

You're backwards. I'm saying the government should not tell us we can live there. We can't.

Before homeowners insurance what did people do? They built their houses in the most sound place, and prepared for the worst. Now we have socialist bailouts for everything. In this case it's for poor planning.

I can't believe you're pretending to be conservative arguing that people should be bailed out of poor decision-making. I bet you're against student loan bailouts, but not this? Nonsense.

Where do you live that is apparently immune from fire, flooding, hurricanes, tornados, floods, lightning, earthquakes, high crime rates, faulty wiring, candles, etc?

Just curious where this location is.

If you live in Cali....

Total health care spending in America went over $4 trillion in 2020 and more than 30% of that – or about $1.24 trillion – was spent on hospital services. Hospital costs averaged $2,607 per day throughout the U.S., with California ($3,726 per day)

Spend one week in a hospital, that will cost you over 25.-000 if you have no insurance,

What if a person gets cancer?

You need insurance simply common sense.

Insurance (some company guaranteeing all costs will be paid at any cost) is what is driving up healthcare. Without the insurance industry, people would be paying $64.99 for a hospital stay.

The dude is literally arguing for private insurance companies to freely offer (or not offer) homeowner's insurance at market rates.

No one has said that the government should prohibit property ownership in high risk areas. Buy where ever you want, but don't call yourself a conservative if you insist that NFIP (Uncle Sam) should incur debt by subsidizing the insurance of your disaster-prone property.

You're *THIS CLOSE* to becoming a universal healthcare-supporting communist.

Maybe just make every house wear a mask.

Its the greatest scam in history, but for different reasons. They produce nothing, all they do is spread risk. We pay them, they pocket the money, and pay a little in claims-ultimate middle man and we are OK with it? I love me some capitalism, but insurance, like roads and the military and clean water need to be centralized. Why does an insurance company need 100s of billions (actually over a trillion) of dollars in pure profit for doing nothing better? Its not smartphones and corvettes. We just need them to spread risk. That could be done by anyone- pay the employees and pay the claims- no need for profit. Medicare doesnt need to profit so its cheap (it has some other issues though, but is wildly popular among beneficiaries). Imagine if medicare had to cover everyone like it does, AND pocket a few extra billion? 95% of folks over 65 couldnt afford it.

The ACA addressed some of this by forcing insurers to pay some percentage of their ill gotten earnings on actual claims. They reacted by lobbying to destroy the entire ACA. So, we tried to keep insurance private, but they didnt do what they were told, and now we are back at square 1. The ACA tried to appease both sides of the aisle, by keeping private insurers, but forcing them to be 1000x more ethical- covering conditions, not dropping people that paid for 40 or 50 yrs but now have cancer, etc. So, now they deserve to be out of business. Medicare for all.

Brian Evan's is still busy googling the lowest risk place to live so he can say he lives there.

So why do we have health insurance to begin with, break it down. Insurance companies came into existence because........go around explain that why.

Capitalism provides products and services more efficiently at a lower cost. Those are just the facts.