this post was submitted on 06 Oct 2025
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How insurance should work: Disasters are unpredictable, are bound to happen and can be very expensive to resolve. So instead of each individual risking bankruptcy for participating in a system, everybody pools together money at a much lower individual cost. That money goes toward a statistical guarantee that the cost of any disaster will be covered.
How insurance actually works (under capitalism): For-profit companies use every tool at their disposal, regardless of ethics or legality, in order to take as much of your money as they can possibly get away with while simultaneously paying out as little as they can possibly get away with, and then pocket the difference.
Why people think first part is great for insurance, but when somebody wants to scale that up its suddenly horrible socialism.
"When you pay the government, you're paying for other people's care. The taxes will go up when more people use and abuse the system and probably won't even be used for healthcare, and will just be used for something equally unimportant to me like feeding someone elses children in a state I don't even live in. When I pay a private insurance company, I'm only paying for me. The rates only go up when the insurance company deems it necessary. The profits go to the people that really deserve it, you know? The hard working executives.
🦅 'murica
How dare you.
The province I'm in has socialized car insurance through a crown corporation. We all pay relatively the same rate, and there are discount tiers applied based on years of experience. If they have a good year of low payouts we get rebate cheques because its not a profit corp.
That's the way you do it, if it must be done at all. And despite my antipathy towards cars, it seems it must.
I would think it would disincentivize driving?
Drive less > less chance of accident > fewer payouts > bigger refund check > adjust forecast lower for next year > lower premiums > GOTO 1
Or maybe it's closer to zero sum. because some think that way while some asshole cough Alberta uses the money on extra tires and gasoline to drive even more.
Not surprising that the refund check doesn't reduce driving in practise. If memory serves - you can't reward a behaviour into extinction, just like you can't punish a new behaviour into existence.
At least, that's if you credit what they teach in applied behaviour analysis courses. I don't get to use my degree much, except at times like this.
Why would you pay for a car to not drive it but instead collect the refunds? It would be cheaper to not have a car. I think it would incentivize driving more as the premiums are low and when that causes premiums to rise higher it would disincentivize owning a car.
What happens if they pay out more than forecast?
Then there might be a rate increase for everyone in subsequent years, but not your current contract.
Another example of this is would be public transport.
Another example of this would be a thousand things: Firefighters, police (not American), education, Healthcare (not American), defense, unemployment, childcare, pensions, roads...
I don't believe in socialized nuclear deterrence, which is why I think every red-blooded American should own their own backyard hydrogen bomb.
Or not to build homes in a place called Tornado Alley, for example.
Iirc, margins for insurance are actually extremely thin. Consumers almost always go with the lowest cost option, and since insurance is mandatory, they don't differentiate much on anything except cost. Insurance companies don't actually make money on insurance premiums. They make money by investing the float.