Saturday, February 21, 2009

Is Insurance Structurally Feral?

It is happening again.

Nobody talked about it the last time, and they are not talking much this time either. All across the country companies are closing their doors. Not because they cannot get customers, though that is a much talked about part of the issue, and not because the banking system is frozen, though that also is a big part of the cause. But there are many companies who could both be customers and have customers, and are not dependent on bank loans to stay in business. These companies are going out of business for lack of any or affordable insurance. Many individuals are also finding themselves in similar straits making themselves poorer customers even if they have a job still.

As long as there is plenty money to be made speculating with other people's money (and even AAA rated obviously carries the risk that it is not) Insurance companies are expansive, writing as much as possible, making unsustainable profits in the use of money, even if the actual insurance gamble is break even at best. Then as always the bubble bursts.

Now suddenly the geniuses who made great incomes when the bubble was growing do not want to see any losses, and there is not so much to be made speculating no matter how much cash is available anyway, so suddenly loss of customers is not a bad thing, especially if you get a lot more profit from the customers you don't lose.

So now that the economy is on its knees the long knives come out to make it worse. Normal business insurance that rarely sees losses may just increase tenfold in cost because the Insurance company needs the extra profit, and more money from fewer people lowers their own exposure. And places like Florida or the Gulf Coast who are very high cash when cash is flowing become suddenly unacceptable risk when raw cash is not as useful, and those who would actually pay claims abandon those areas to ripoff and run operations who will just go bankrupt if there is any major claims.

Each Insurance type will operate slightly differently because the arithmetic is different, but while they will claim secret vetting, and some will do more of what they promise for the money they charge, without some embedded scam there can be no profit. And without a guarantee over time that serious losses will be made up, an actual free market would dump the burdened Insurance company for the one without past promises to keep. In short the Insurance company has to do the job of a government, but is managed as a Pirate Fiefdom, collecting the taxes but avoiding paying the bills, and with little to hold them accountable.

I already wrote about Health Insurance a while back and the Gapminder that showed differences between countries now also shows some information about different states as well. This particular view shows an assortment of states with the accidental deaths per number of vehicles to be fairly constant no matter the size of the state. Those above the diagonal are doing better than those below who have more deaths per vehicle and those moving toward the upper left are improving over time, the red pay higher insurance rates and the blue to green lower rates.
As one can see Texas and Florida have nearly the same numbers but Florida pays much higher rates, similarly with Illinois and New York. The link above goes to similar settings where it is even more dramatic. The live Gapminder there allows you to adjust what you are looking at .

What the Gapminder shows is that risk of deaths is quite unrelated to the price of insurance beyond that there is an increase in price nearly everywhere, even when the number of cars or number of accidents ( and thus the risk) is dropping. (Off the topic a bit is the sudden change in almost all states at Y2K and what might have caused that)

There is much hype in the air about how the Society is in such danger of being Socialized, as if an Unsocialized Society like an Unsocialized Child is a preferable outcome. Much pointing is done at the Soviets as the prime example of a Socialized Society because they claimed that they were one, but they also claimed to be as democratic as socialized as indeed they were neither in equal amounts.

The true Socialized Society is the opposite of feral, such as is found in some failed states, as the Government drowns in a libertarian nightmare of competing militias, and rogue warriors, that destroys all that society can produce. In short the Insurance company does for the most able to pay that which is least needed, and tossing the rest under the bus, and taking a giant piece of the society's productivity with it.

That safety net is what government is supposed to do, whether defending against outside enemies or inside disasters. A more deeply thoughtful system needs to be devised.

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One evening an old Cherokee told his grandson about a battle that goes on inside people.

He said, "My son, the battle is between 2 "wolves" inside us all.

One is Evil. It is anger, envy, jealousy, sorrow, regret, greed, arrogance, self-pity, guilt, resentment, inferiority, lies, false pride, superiority, and ego.

The other is Good. It is joy, peace, love, hope, serenity, humility,
kindness, benevolence, empathy, generosity, truth, compassion and faith."

The grandson thought about it for a minute and then asked his grandfather:

"Which wolf wins?"

The old Cherokee simply replied, "The one you feed."

from an old tale.

The Golden Rule
“That which is hateful to you do not do to another ... the rest (of the Torah) is all commentary, now go study.”

- Rabbi Hillel



The self made man just isn't admitting how or where he came by all those parts

---FreeDem---- Aug 2005


If a man tells you that the Government cannot accomplish anything of value, then voting for him would be like hiring an Amish Auto Mechanic.
If they don't believe in the concept, they are more than likely to do a very poor job of it.

---Bob Danforth Sept. 2009


Republicans never meant to cut government waste, fraud and graft, from the get-go their plan was to organize, monopolize and privatize waste, fraud and graft.

They see the civil service as meddling “middleman,” who interfered with the free flow of cash from taxpayers into corporate coffers. Their intent was to eliminate the “middleman” as an obstruction to corruption.

---Unknown rabblerowser Feb 2007


No one can terrorize a whole nation, unless we are all his accomplices.

Edward R. Murrow

In the beginning of a change, the patriot is a scarce man, brave, hated and scorned. When his cause succeeds, however, the timid join him, for then it costs nothing to be a patriot

Mark Twain


You see, we often get noncreative leaders, people most interested in preserving their own positions. They flock around centers of power. Such centers attract people who can be corrupted. That is a more descriptive observation than to say simply that power corrupts and absolute power corrupts absolutely.

If you are corruptible and your imagination is confined to worries about loss of power, you exist in a self-destructive system. Eventually, as all life does, you must encounter something you did not anticipate, and if you have not strengthened your creative resources, you will have no new ways for adapting to change. Adapt or die, that's the first rule of survival.

The limited vision of noncreative people is not difficult to understand. Creativity frightens the unimaginative. They don't know what's happening. Things new and unexpected arise from creativity. This threatens "things as they are." And (terrible thought) it undermines illusions of omnipotence.


Herbert 1984 (the year not the book)


"News is what powerful people want to keep hidden; everything else is just publicity."

....Bill Moyer


Just as having only a hammer makes every problem either look like a nail, or as something irrelevant, our very technological skills have had us look there for explanations and ignore reality it cannot deal with. With our powerful hammer, we seek only nails, and dump the rest as dross. Not all questions involve hammers, not all answers are nails.
-- Freedem---Nov., 2006

My issue with Atheists is not that they have no God, there are many religions that have no God, but that they have no religion.
-- Freedem---Nov., 2006

__Note: by this I mean that there are many things religions do besides the discredited "science" and self serving promises (give me your money and God will hold and pay the note), many like charity or fellowship, even social accountability can be very good things not requiring a God.


Many have been very disappointed that their "God-critter" was not to be found as a technology swimming about in the shallower pools of knowledge. So in the obsession basic to our culture, we search ever deeper and more difficult pools, and always the "God-critter" seems to wink at us from the pool just beyond.

In the process we have found technologies beyond the wildest dreams of our most sophisticated ancestors. The great joke is that the "critter" never existed except as the pools themselves.

----Freedem --- Oct 2006

Indeed I do think that many folk, believe all kinds of stuff from the actually true, to the utterly illogical, with no personal discernment one from the others. But that would hardly make any of them a scholar to rely on, any more that one should get their theology studies from a door to door salesman, offering "get out of hell free" cards, on special because the creator of galaxies in greater numbers than beach sand, nonetheless has an ego so weak He cannot exist without shamelessly excessive psychophancy from a major portion of the inhabitants of this particular dust speck.

----Freedem ---June-2007

More to come