Editor,
The recent crises about the difficulty in obtaining home fire insurance demonstrates the intrinsic flaw of our current insurance system. The purpose of insurance is to spread risk — where everyone chips in a little so an individual is not devastated by an event.
Insurance has become a for-profit industry and, like any business, it exists to make a profit. However, insurance functions very differently from most companies. For most companies, the better the product and the more efficient they are, the better they do. Insurance companies are just the opposite. The more inefficient they are in paying claims the better they do. There is no incentive to be better. They hire a battery of folks to figure out how not to pay claims. Everybody’s bonus depends on how well they do in not paying claims.
In a perfect world insurance — whether it be home, auto or medical — would be a revenue neutral enterprise. It would not be making multimillionaires out of CEOs. If we had a competent government, all insurance would be covered by our tax system, but instead we will likely continue jumping from one crises to another.
Steven Howard
Redwood City
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(2) comments
Wow Stephen, we agree on something! Same can be said for health insurance and the medical industry. We have turned over basic functions of society to profiteers.
No profit, revenue neutral means no way to maintain and make things better. Take healthcare for an example, profits are used to build new hospitals, maintain or upgrade equipment, and need to pay the best doctors etc... The main issue is there is a huge part of society who don't pay their fair share for healthcare and are subsidized by those who do pay for healthcare. Then there is huge cost the industry is forced to absorb when people walk into a hospital, gain treatment and then walk out of the hospital without a paying a dime.
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