@davidnash asks via Twitter :

Ahh David, so nicely put.

In some ways, I like insurance. It’s a kind of win-win situation if you think about it. If you fall victim to fire, flood, theft, etc you are duly compensated. And if not, great! Sure you had to pay the insurance .. but nothing happened. You should be happy!

Now I know a lot of people take the gamble and don’t insure and that’s fine. Many people take that gamble and win. But of course, all you win is the insurance cost you would’ve spent. If you lose.. you stand to lose a lot more than that. Damn you, Pascals wager!

I happen to pay a lot of insurance. My god, do I pay. DNA Digital is insured for public liability of $5M, and we have contents insurance for the office. I have separate land-lords insurance for the rental of the same. My wife and I each have a life insurance policy on top of that mortgage, which also has mortgage insurance. I pay the insurance for my wife’s car and my own, and we have home and contents insurance as well. Then we pay the strata managers, which includes building insurance. We have another mortgage with mortgage insurance on that, and ANOTHER two life insurance policies! Finally, we have another investment property with has land lord insurance, and more mortgage insurance. How many policies is that? Umm.. FIFTEEN. That’s right, my wife and I have FIFTEEN insurance policies between us.

So you can understand why I get a little upset when, in the last decade insurance premiums have risen dramatically. There was an initial spike after 9-11 however the data suggests the rise is due to an increase in climate related events. The climate change deniers must be upset about their rising premiums I’d imagine, seeing as the weather change is imaginary and all.

On the face of their share prices though, private insurance companies did very well before the GFC. How does the GFC affect an insurance companies share price? One can only assume people didn’t renew their insurance? Or perhaps it’s tied in with the investment of those premiums in global markets.

It doesn’t look like it’s bouncing back either.

I’m wary of insurance as a private sector, where capitalism dictates profit driven business management and so premiums are always rising to keep shareholders happy, and genuine insurance claims are always met with a rabid scepticism. We all know someone who has had a legitimate claim rejected on the basis of a technicality (Act of God?).

I imagine that a government managed insurance fund that was “not-for-profit” would keep premiums down and protect a population from financial ruin in adversity. If it was geared for a small profit, those profits could be used for government spending in education or other infrastructure.

There’s my take. Ultimately insurance is a not a long con, and it’s there to protect us. For-profit businesses, however, may undermine the very principles for which insurance exists and so should be regulated or provided as a federal scheme.

That is, in my humble opinion as someone who knows nothing about it.