Electric Monkey Pants

Okay, this is probably not a news flash for most of you, but there is a new article on the AP wire about the insurance industry’s record-breaking profits in the face of tumult (rather like the oil industry, wouldn’t you say?):

The Consumer Federation of America’s insurance director, J. Robert Hunter, accused the biggest players in the industry of “gouging” the public on their way to an estimated combined after-tax profit of nearly $60 billion in 2006.

Hunter’s comments followed the release of a study by the federation that showed automobile and home insurers’ profits have surged in recent years — despite billions of dollars in damage from Hurricane Katrina and other storms — in part because they have shifted more costs to consumers and taxpayers.

The portion of premiums paid in benefits by the largest insurers has dropped from 75 percent in the late 1980s to about 60 percent today, the study found.

“It’s a combination of gouging” and being too conservative, Hunter said.

I’m not sure why people buy insurance. Oh wait, yes I am; They are forced to by law! In my state (Minnesota), we are forced to buy car insurance whether we want to or not. It’s a requirement in order to drive a car. So basically, the only question is which insurance company gets my 800 bucks every year. I wish I was in a business that was propped up by the government in such a manner. I wish I made an invisible substance (I’ll call it, “enshurence”!) that was legally mandated for anyone wishing to drive a car. And the best part is that I could screw over customers who make claims and there’s nothing they can do but go to a different company because they’re legally mandated to buy it!! Muuhahahahahaaaaa!!!

If you couldn’t tell from the preceding paragraph, I think insurance is a gigantic scam. Do I really have to back that up? I mean, all you have to do is look at how much money they made collectively this year — 60 billion in profit — to figure out who’s getting the better deal. So if you don’t believe me, you’re probably a sucker. And there’s nothing insurance salesmen like better than a sucker!

Why, if insurance is so great, are there laws forcing us to buy it? And why, if the insurance companies are providing us a valuable service, do they end up making so much money off of it? These are the questions they don’t want you to ask.

All it takes is a simple glance at the corporate headquarters of an insurance industry giant and you can probably gather who’s getting the better deal. Their highly-polished tower of steel and glass was financed by your monthly checks, whether you sent them in because you wanted insurance or not.

I guess insurance wouldn’t be a bad idea if you are constantly getting struck by lightning, or by cars. But then, of course, your premiums will go up. Insurance companies are masters at assessing risk. Basically, they’re gamblers. Each time they take on a new customer they’re betting that the customer will pay them more in premiums than they will pay the customer in claims. And the house always wins.

It helps that the insurance companies are the penultimate arbiter of who gets a payout. That may explain why the insurance industry still managed to turn record profits in 2005 and 2006 despite the many claims relating to Hurricane Katrina. I’d like to think it was just good money-management by the insurance companies, but I think we all know that there’s a lot of Katrina victims who got screwed. Even Republican Senators get screwed by the insurnace companies reluctant to hand out money… although that might be a little comforting (everybody in the same boat, etc.), Trent Lott has been accused of using his influence to better his own situation. Go figure.

I guess the rest of us will continue to suffer through. When I bought a house I found out (the hard way) that there’s more to this scam. Technically, I don’t own my house because I haven’t paid for it yet (that will take 30 years of mortgage payments), so in the meantime, the bank that owns “my” house has insisted that I pay for insurance coverage on their house. Pretty sweet fucking deal for them, eh? It’s even ironically named “homeowners insurance.” I guess the homeowner in question is the bank. And a quick glance at the policy indicates that it doesn’t cover the house in the event of a flood or earthquake. Good. I’d hate to pay all that money and actually get some useful coverage in exchange.