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surveyorshawn
03-25-2010, 01:38 PM
Ok, in the healthcare thread, I basically said that insurance companies make their money by charging people for services while banking on the fact that the majority of their clients will not need those services. Basically you pay for health insurance while they bet you will not get a catastrophic illness, you pay for auto insurance and they bet you will not get in a wreck, you pay for homeowner's insurance, and they bet you will not have a fire, flood, or break-in. Of course, out of the millions they insure, thousands of claims are filed, but statistically, the companies win, or, like I said, they could not make a profit or stay in business. If I am wrong about how they make money, which I could be, then someone please enlighten me as to how they do it....

NateR
03-25-2010, 01:53 PM
Ok, in the healthcare thread, I basically said that insurance companies make their money by charging people for services while banking on the fact that the majority of their clients will not need those services. Basically you pay for health insurance while they bet you will not get a catastrophic illness, you pay for auto insurance and they bet you will not get in a wreck, you pay for homeowner's insurance, and they bet you will not have a fire, flood, or break-in. Of course, out of the millions they insure, thousands of claims are filed, but statistically, the companies win, or, like I said, they could not make a profit or stay in business. If I am wrong about how they make money, which I could be, then someone please enlighten me as to how they do it....

I think you pretty much nailed it. Insurance companies are selling piece of mind and a false sense of security. If everyone who owns a policy from X Insurance Company, suddenly got sick and needed surgery, hospital stays, medication, etc., then that company would go bankrupt long before they could pay out the benefits to their customers. So, they want healthy people, who will rarely, if ever, need more than a routine medical check up; because those are the people who they make their money on.

Spiritwalker
03-25-2010, 01:58 PM
See Nate sucked up to me here... I said in the healthcare thread that

"So THIS is what HITTING THE FREAKING NAIL ON THE HEAD .. REALLY looks like!!!
Very Well Said Sir!"

so.. either Nate is sucking up to me by using my statement, or plagerizing me... either way... $5K will settle the lawsuit!

Neezar
03-25-2010, 02:01 PM
See Nate sucked up to me here... I said in the healthcare thread that

"So THIS is what HITTING THE FREAKING NAIL ON THE HEAD .. REALLY looks like!!!
Very Well Said Sir!"

so.. either Nate is sucking up to me by using my statement, or plagerizing me... either way... $5K will settle the lawsuit!

Yeah and we all know that you coined the term. :laugh:

Spiritwalker
03-25-2010, 02:17 PM
well... I can "try"

County Mike
03-25-2010, 02:40 PM
I think it's a lot like gambling. You probably won't need the insurance but you buy it anyway, just in case.

You probably won't win at the blackjack table, but you play anyway just in case.

Only with insurance you buy it out of fear. Gambling you do out of greed or just the excitement of it.

surveyorshawn
03-25-2010, 02:43 PM
I think it's a lot like gambling. You probably won't need the insurance but you buy it anyway, just in case.

You probably won't win at the blackjack table, but you play anyway just in case.

Only with insurance you buy it out of fear. Gambling you do out of greed or just the excitement of it.

I agree totally. I think that pretty well fits with what I was saying in the heath care thread as well.

logrus
03-25-2010, 02:58 PM
I think you pretty much nailed it. Insurance companies are selling piece of mind and a false sense of security. If everyone who owns a policy from X Insurance Company, suddenly got sick and needed surgery, hospital stays, medication, etc., then that company would go bankrupt long before they could pay out the benefits to their customers. So, they want healthy people, who will rarely, if ever, need more than a routine medical check up; because those are the people who they make their money on.

Thats why its tough for me to get insurance based on what I went through as a child. My dad got into a legal battle with his insurance company when they tried to drop him when he needed treatment.

Its kinda funny but I read somewhere a long time ago that Ben Franklin was part of an insurance company and denied claims and insurance to people who built wooden houses.

To the OP thats pretty much how they make their money. They hope bad things don't happen and when they do. They just do a quick investment with your money and make a few bucks on it before they give you your money and what they make they just keep investing it til they recover the loss.

Twinsmama
03-25-2010, 03:05 PM
This is a silly thread. I only got a survey because my mortgage company made me. Chances are the piece of property I was buying was actually where it was suppose to be. All of my neighbors had surveys done and process of elimination would say my property was right where it was suppose to be. Still mortgage company required it. Surverys are a crock!! Waste of money. :stirthepot: (i'm actuall being sarcastic. the survey wasn't important to me but i can understand why it is important so someone doesn't lose money they loaned me on the wrong piece of land)

This can be said about so many things. It seems like you just had a personal experience and are bitter about something. Are you really mad that insurance companies are in the business to make money. I am in business for myself to make money aren't you? I'm not a bad person and I don't believe you are either.

I don't agree with forcing people to get it. I do however agree with forcing people who do not pay their medical bills to pay them. I would go as far as to say...if you don't want insurance fine that's okay with me but if you have medical bills and have no coverage you will pay out of pocket. even if it means a lien on anything you have. if people took responsibility for themselves.....well i guess that's another thread.

surveyorshawn
03-25-2010, 03:20 PM
I'm not mad or bitter. I just made a comment on how they make their money, and I don't believe it's right that I should be forced to buy into it. I don't have insurance, and when I go to the doctor, I pay for it out of my pocket. I don't go to the casinos or gamble. When I go to subway, I pay $5 and walk away with a footlong. My only gamble is whether it will taste good or not, not if I will actually get the sandwich I am paying for. I should have the right to choose whether I want to purchase insurance or not. If I want to buy the product, then fine, I buy it and don't complain about spending my money on it, because I did it out of my own free will. I have a whole life insurance policy that I do not consider a waste, because I can convert it into a retirement plan and draw it all out if I want to, and if I do, I will receive a benefit that is greater than the amount that I paid in. Either way, I win. I was not forced to buy it, though.

Twinsmama
03-25-2010, 03:31 PM
I must just be missing the whole point.

Are you complaining because you don't agree with being forced to buy it?
I don't agree w/ being forced to buy it but I believe in being forced to pay medical expenses if you didn't buy it.

Are you mad that insurance companies make money? You are not wrong on how they make their money. They bet on bringing in more than they pay out. I'm pretty sure that should be in everyone's business plan.

I don't believe they should make so much money but if we limited them on how much profit they make should we limit me or you on our profit?

Do you only believe in buying insurance where "you win"?

sorry for the follow up questions i'm just not getting your point i guess.

surveyorshawn
03-25-2010, 03:42 PM
I must just be missing the whole point.

Are you complaining because you don't agree with being forced to buy it?
I don't agree w/ being forced to buy it but I believe in being forced to pay medical expenses if you didn't buy it.

Are you mad that insurance companies make money? You are not wrong on how they make their money. They bet on bringing in more than they pay out. I'm pretty sure that should be in everyone's business plan.

I don't believe they should make so much money but if we limited them on how much profit they make should we limit me or you on our profit?

Do you only believe in buying insurance where "you win"?

sorry for the follow up questions i'm just not getting your point i guess.

I started this thread (well moved it from the other thread as it was off topic) because Chuck said I must have written it because I don't understand how insurance companies operate. So I figured perhaps someone could enlighten me as to how they make their money if I am wrong, though I don't think I am. I'm not mad, I think they're pretty smart. I wish I could sell a product that I rarely have to deliver, lol. I don't think I should be forced to buy it, and I think most of us on here agree on that point. I do think everyone should have to pay for any services that they use, and I do pay for the services that I use, medical or otherwise. If you go to the doctor, ER, etc, you should pay for it if you don't have insurance, Medicaid, etc.

I try to only buy goods & services where I win, of course, because times are hard, and that only makes good sense anyway. Of course that isn't always possible. If I made lots of money, I guess I wouldn't worry about whether I won or lost on health insurance, but every dime is a major issue for me right now.

Anyway, to reiterate, I made the thread because Chuck said I must not understand how insurance companies work or make their money, so I spelled out how I believe they make it, and opened it up for discussion.

rearnakedchoke
03-25-2010, 03:47 PM
i have to agree with mama on this .. yes it is wrong to force people to get insurance, but if people were paying their bills, there wouldn't be such a burden and need for this bill ... i think there may be a better solution, but no one has come up with one and half of the gov't doesn't want to help with the solution ...

Twinsmama
03-25-2010, 03:57 PM
Okay I get it then. I should be able to clear this up.

Yes Insurance Companies want to make money. yes they will charge more when they are insuring older people, people with illnesses or even people in certain counties when i comes to health and life insurance.

Yes they charge more for young drivers, elderly drivers, and people with tickets or accidents. also the county you live in may affect it. more population more of a premium

Yes they charge more for people that live on the coast and could have more damage from a hurricane or live away from fire hydrants.

I'll have to go back and see what Chuck was talking about and get back to you on that part.

Shoots like a girl
03-25-2010, 05:18 PM
I'd really like to put my 2cents in on this one as I am an insurance agent in the state of Indiana. I get exactly what you are saying and I'd like to make a few points. First I completely agree that HEALTH insurance shouldnt be forced. I think we should decide whether we buy health insurance or not. With the country in this economic situation its just really impossible for some to afford health insurance to begin with! I do however agree with the need to force property and casualty insurance because of the need to protect others from someones own negligence.

Insurance companies absolutely make their money from the premiums paid by those who are the lower risk. Insurance is a complicated thing and very easily misunderstood. But I did want to comment on one thing you said..........you said: "I wish I could sell a product that I rarely have to deliver, lol"

Insurance companies do deliver. Even when its not being used its still available. The second that its needed, its there. Its not a product as much as it is a service and peace of mind to know that should that teen girl whos texting instead of driving runs that stop sign and she DOESNT have insurance.... you do. And if you ever worked claims in a company you'd learn pretty quick that "rarely" isnt completely acurate, not even close. LOL

I had no idea how complicated this business can be until I started wading in. Those big shots in the corporate offices are getting rich, of that there is no doubt. But if that much money came with that much stress Im afraid I would pass!! They can have it!
:frantics:

flo
03-25-2010, 05:30 PM
I don't agree with forcing people to get it. I do however agree with forcing people who do not pay their medical bills to pay them. I would go as far as to say...if you don't want insurance fine that's okay with me but if you have medical bills and have no coverage you will pay out of pocket. even if it means a lien on anything you have. if people took responsibility for themselves.....well i guess that's another thread.

Word. I couldn't agree more.

County Mike
03-25-2010, 05:39 PM
i have to agree with mama on this .. yes it is wrong to force people to get insurance, but if people were paying their bills, there wouldn't be such a burden and need for this bill ... i think there may be a better solution, but no one has come up with one and half of the gov't doesn't want to help with the solution ...

I came up with a better plan. Increase everyone's income tax by 5%. At that point, healthcare is free for everyone. The government will pay the doctors and hospitals for submitted claims. If 5% isn't enough, add one percent to every state's sales tax and put that towards healthcare.

5% of my income would cost more than my current insurance plan. However, I'd be willing to pay it knowing I wouldn't have to worry about co-pays, deductibles, etc. The big losers would be the insurance companies because nobody would need health insurance anymore.

I can live with that. Sorry Chuck and Twinsmama. I'm sure there's still plenty of auto, homeowners, etc. insurance to sell.

surveyorshawn
03-25-2010, 05:40 PM
I'd really like to put my 2cents in on this one as I am an insurance agent in the state of Indiana. I get exactly what you are saying and I'd like to make a few points. First I completely agree that HEALTH insurance shouldnt be forced. I think we should decide whether we buy health insurance or not. With the country in this economic situation its just really impossible for some to afford health insurance to begin with! I do however agree with the need to force property and casualty insurance because of the need to protect others from someones own negligence.

Insurance companies absolutely make their money from the premiums paid by those who are the lower risk. Insurance is a complicated thing and very easily misunderstood. But I did want to comment on one thing you said..........you said: "I wish I could sell a product that I rarely have to deliver, lol"

Insurance companies do deliver. Even when its not being used its still available. The second that its needed, its there. Its not a product as much as it is a service and peace of mind to know that should that teen girl whos texting instead of driving runs that stop sign and she DOESNT have insurance.... you do. And if you ever worked claims in a company you'd learn pretty quick that "rarely" isnt completely acurate, not even close. LOL

I had no idea how complicated this business can be until I started wading in. Those big shots in the corporate offices are getting rich, of that there is no doubt. But if that much money came with that much stress Im afraid I would pass!! They can have it!
:frantics:

I was being a little facetious when I said rarely, lol.:) But I did get my point across about how the money is made, even though I exaggerated (sorry!). I agree about property and casualty insurance, as I have had first hand experience with it. Those things are to protect others from our own negligence, or us from the negligence of others. Also, I don't have to drive an automobile. I can walk or use public transit (if I lived in the city, which I don't). I can rent a home rather than own one. Forced health insurance is a penalty (or tax) for just being alive. If it remains a law, then there is no way around it, other than not being alive. Anyway, it seems we are pretty much all in agreement about not being forced to purchase health insurance. I think there were some pretty simple fixes to the system besides the ones set forth in this bill, but that is for another thread. As someone else, perhaps several others have said, this was not about health care at all, it was about power and control. It was also about cementing someone's political legacy.

logrus
03-25-2010, 05:46 PM
I came up with a better plan. Increase everyone's income tax by 5%. At that point, healthcare is free for everyone. The government will pay the doctors and hospitals for submitted claims. If 5% isn't enough, add one percent to every state's sales tax and put that towards healthcare.

5% of my income would cost more than my current insurance plan. However, I'd be willing to pay it knowing I wouldn't have to worry about co-pays, deductibles, etc. The big losers would be the insurance companies because nobody would need health insurance anymore.

I can live with that. Sorry Chuck and Twinsmama. I'm sure there's still plenty of auto, homeowners, etc. insurance to sell.

U got my vote buddy...

rearnakedchoke
03-25-2010, 06:01 PM
I came up with a better plan. Increase everyone's income tax by 5%. At that point, healthcare is free for everyone. The government will pay the doctors and hospitals for submitted claims. If 5% isn't enough, add one percent to every state's sales tax and put that towards healthcare.

5% of my income would cost more than my current insurance plan. However, I'd be willing to pay it knowing I wouldn't have to worry about co-pays, deductibles, etc. The big losers would be the insurance companies because nobody would need health insurance anymore.

I can live with that. Sorry Chuck and Twinsmama. I'm sure there's still plenty of auto, homeowners, etc. insurance to sell.

that is how it is done in canada .. i don't have to get insurance, i don't put in claims ... i have a health card, and when i go to the doctor, i show my healthcard .... i never get a bill in the mail either ... prescriptions are covered, but my work covers that and dental ... i think there is assistance for those who can't pay for their scripts, but it is cheaper up here anyways ...

Shoots like a girl
03-25-2010, 07:31 PM
I came up with a better plan. Increase everyone's income tax by 5%. At that point, healthcare is free for everyone. The government will pay the doctors and hospitals for submitted claims. If 5% isn't enough, add one percent to every state's sales tax and put that towards healthcare.

5% of my income would cost more than my current insurance plan. However, I'd be willing to pay it knowing I wouldn't have to worry about co-pays, deductibles, etc. The big losers would be the insurance companies because nobody would need health insurance anymore.

I can live with that. Sorry Chuck and Twinsmama. I'm sure there's still plenty of auto, homeowners, etc. insurance to sell.


I hate to break it to you, but most insurance companies arent making a crap load of cash on health policies. I know the agents certainly arent. Most of our income comes from P&C polices but mainly life policies. It isnt a conspiracy on the companies part.

I think we are getting all worked over something that will change in a few years, though. I think this........man....will do as much damage as humanly possible and then we are rid of him the next election. I just feel sorry for guy, or girl(ya never know!) who has to follow him with the BIG OLE POOPER SCOOPER!

Chuck
03-26-2010, 02:14 AM
Wow!! You've all been busy posting haven't you? I was out most of yesterday with a migraine and I've been trying to get caught back up with work this morning so forgive me for being late to respond and posting such a long response. To make it easier I'm just going to post my replies in Red. I know that makes it harder if you quote me but it's the quickest way. :)

This legislation does not solve anything.
I agree completely.

Insurance is a racket, and always has been.
This whole part of your post really demonstrates your lack of understanding of either the insurance industry as a whole, this legislation or perhaps both. First off insurance isn't a "racket", I simply don't think you understand it. I'll touch on that more later. :wink:

All this does is guarantee the insurance companies business and clientele.
Temporarily yes. But it's not a win for the insurance companies. Read below.

Insurance companies sell you a policy and take a gamble that you won't need it. They win the overwhelming majority of the time, or they wouldn't still be in business, think about it, people! Now the government is, like Nate said, bailing them out.
Wrong. Completely wrong! No insurance company could stay in business if this was a "gamble". Companies use things like the Law of large numbers, risk pooling, predictability and complex algorithms to manage risk. They do NOT win anywhere close to the majority of the time. Far from it. What this will do is bankrupt the insurance companies leaving us with pure socialized medicine. This eliminates the free market system and everything that comes with it.. innovation, research, lower prices. This will do nothing but increase government. This isn't a "win" for the insurance companies.. far from it.

If this was healthcare reform, the government would be getting into the public healthcare business, or would be severely reforming the insurance system and just expanding medicaid coverage beyond children & pregnant women so other poor people could qualify. If we are going to force people to buy products, then force all property owners to have a property survey every 5 years, that way I can pay to afford the new "healthcare" legislation, because I will be guaranteed an income like the insurance companies are now! Forcing people to buy insurance does not solve the problem of people who have been turned down or who can't afford it.
I agree. This hasn't been about healthcare reform since the begining. To reform healthcare Congress would have to take on Tort reform and a lot of greedy, high priced attorneys. Simply put there are too many attorneys in Congress for them to take on Healthcare reform. On a side note Medicaid is available to all people and not just children and pregnant women. It's based on income and not the gender of the applicant.


When I buy health insurance, I am betting with the insurance company. They are betting I won't get sick & they won't have to pay, and I am betting I will get sick and they will have to pay. Either way, I lose.
I covered this before but this is incorrect. They are not betting you won't get sick. What they are is trusting their statistical data so they can collect enough premiums to cover those who do, invest some of the rest and still make a profit. You do surveys for a profit right? :mellow: But to be honest Shawn what's sad about this is your perception that either way you lose. In the above scenario either way you WIN in my opinion. Either you fall ill and fortunately have insurance to help cover some of the costs or you stay healthy. I see that as win/win personally.

If I don't get catastrophically ill, I will never get back the value of the premiums I have paid....not even close.
Oh? :huh: I'm curious how you define value then. Airbags used to be an option in cars. Do you think people needed to crash and use them to truly get any value or do you think perhaps some of the value was in knowing it was there if you needed it?

if I am sickly, they may drop me or increase my rates exponentially. I know this because I have friends and family in that very situation.
That was true many, many years ago but not any longer. There has been some positive gov. regulation put in place to keep companies from raising rates on individual people. All rate increases have to be submitted to the state and approved. Rate increases now can be rendered on a class/group only. Single males 25-28 for example.

The insurance companies have their businesses set up so they will not lose. Of course, or they would not still be in business! The goal is to turn as much profit as possible, not to provide a service. It is a business, not a charity.
You say that like it's a bad thing. I personally don't know of many businesses that are set up to lose. Is your surveying business set up to lose? Or to turn a profit? I'm pretty sure the Hughes family farm is set up to turn a profit, Mac's concrete business or anybody else on this board who's self employed. That's ok isn't it??? You feel that they aren't set up to provide a service because at one point I'm guessing you were hurt or burned by an insurance company. If that's accurate I'm sorry. But I think it may have impacted your perspective a bit.

You're probably a cool guy, Chuck. You're entitled to your opinion, and I'm entitled to mine. Let's not insult one another because they differ, how about it?
Well thank you! I'd like to think I'm a cool guy and like I've already said I admire you and your dedication to your son. I can separate disagreeing with one's opinion from insulting/disliking the person. I hope you can too. :)

Several years ago I looked at insurance with doctor's visit coverage. That coverage was an additional $50/month per person. At the time, a dr visit in my town was about $30. So, just to get my money's worth, I would have to go to the dr about 1.5 times every month, which, of course, I do not normally do. I only went 3 or 4o times a year at most.
So you looked at the price and coverage and compared it to your current usage. From there you made the decision to pass on the coverage. Sounds like a good choice. That's exactly what I encourage my clients to do. But what if somebody with a chronic illness who needed to go to the Dr. multiple times a month elected that coverage? Would it still be a racket? A scam? To them it would save them money. Exact same benefit/product/insurance company but a different person. Because something might not benefit you personally doesn't mean it's a racket or a waste. It simply means it's not the coverage/product for you.

Unless you suffer a catastrophic illness, you will never recover the premiums you have paid. If that was not true, they would not still be in business.
Do you think your entitled to?? :blink: If you're looking for an even dollar for dollar trade then use a savings account. You have a double standard. If you paid $6000 a year in premium and had a heart attack how would you feel if they only paid exactly $6000 of the bill???? Even dollar for dollar. WOW I'd love to be a fly on the wall when you got that statement!! :laugh: Even though you paid 6K in premium you would expect them to pay more than that for your claim would you not? Well where does that money come from? I think your expectation on the insurance company is not only unfair but impractical.

Here in Mississippi, several companies almost went under, and tried to refuse coverage in the Southern part of the state after Hurricane Katrina because they actually had to pay out (imagine that) because of all the claims, but the government would not let them, and they had to suck it up.
I don't do P&C but I would imagine this was probably a cash reserve issue. If they had low cash reserves and another natural disaster struck they would have been unable to pay the claims. Had that happened you would have complained about that too. :wink:

Unfortunately, I cannot get my son on insurance because of his heart condition.
I'm pretty sure that you can. If you want to shoot me a PM I'd be happy to look into it for you.

I did not have insurance when he was born,
That's really unfortunate. I imagine his medical care was horribly expensive. If you did have insurance and it paid the majority of his bills would you still think it's a racket? :unsure: What if it only paid an amount equal to the premiums you paid? Would you be happy with that?

Thank goodness I am a veteran and I can go to the VA for a lot of my health care needs. I have not been able to work in a couple of months because I am in the middle of a relapse of the MS, but the economy is so bad right now that I have not gotten very many calls for surveys anyway, so I haven't actually missed much work if you look at it like that.
I appreciate your service brother and I'll be praying for your MS and that work picks up.


Insurance companies are selling piece of mind and a false sense of security.
I wonder who's mind they're selling pieces of?? :scared0015: Or did you mean peace of mind? :D Ok.. back to the point... Is peace of mind wrong? What's wrong with a sense of security knowing that your protected against an unforeseen event????

If everyone who owns a policy from X Insurance Company, suddenly got sick and needed surgery, hospital stays, medication, etc., then that company would go bankrupt long before they could pay out the benefits to their customers.
There may be some truth in that depending on the surgery etc but it's a bit of a stretch. But again.. is that wrong? If every person who banks with Bank of America went to their local branch and withdrew all of their money they wouldn't have enough to cover it. I guess I'm failing to see your point.. :huh:

So, they want healthy people, who will rarely, if ever, need more than a routine medical check up; because those are the people who they make their money on.
That's true. But it's also the healthy people who allow the insurance companies to pay the claims for those that get sick. It's called risk pooling. That's what keeps insured people who suffer a catastrophic illness from going bankrupt and losing everything. Or worse yet, skipping out on the bill and making the rest of us pay for it.

Only with insurance you buy it out of fear.
I never have. :blink: I buy it because it's a wise investment to protect my assets and my future. But that's just me. :)

I should have the right to choose whether I want to purchase insurance or not.
I agree.

I have a whole life insurance policy that I do not consider a waste, because I can convert it into a retirement plan and draw it all out if I want to, and if I do, I will receive a benefit that is greater than the amount that I paid in. Either way, I win.
I hate to keep being the bearer of bad news but I would be willing to bet that's not accurate. In almost every case buying a term policy and investing the difference would yield you a greater return plus you would have greater access to it as a liquid asset. The problem is most people (myself included) don't have the self discipline to invest the rest. In some cases due to tax implications a whole policy could be a better choice but those are few and far between.

I wish I could sell a product that I rarely have to deliver, lol.
I'm curious how you define "deliver"..... :huh:

If you go to the doctor, ER, etc, you should pay for it if you don't have insurance, Medicaid, etc.
Well if you use Medicaid you're not paying for it.. technically we are.

If I made lots of money, I guess I wouldn't worry about whether I won or lost on health insurance, but every dime is a major issue for me right now.
I wish I would have counted how many times you said "win, won, lose & lost in your posts. I'm willing to bet you said that even more than I say "brother" and trust me that's a lot!! :laugh: It's not a contest Shawn. It's not something you keep score on.. you buy insurance to protect yourself against catastrophe and manage your risk. There's no scorecard. Your constant win/lose claims are part of the reason I'm not sure if you really understand what insurance is or how it's supposed to operate.

My .02 for what it's worth. :cool:

matthughesfan21
03-26-2010, 02:44 AM
Ok, in the healthcare thread, I basically said that insurance companies make their money by charging people for services while banking on the fact that the majority of their clients will not need those services. Basically you pay for health insurance while they bet you will not get a catastrophic illness, you pay for auto insurance and they bet you will not get in a wreck, you pay for homeowner's insurance, and they bet you will not have a fire, flood, or break-in. Of course, out of the millions they insure, thousands of claims are filed, but statistically, the companies win, or, like I said, they could not make a profit or stay in business. If I am wrong about how they make money, which I could be, then someone please enlighten me as to how they do it....Exactly, they do have to pay some claims, but they pale in comparison to the money they bring in...I think I saw somewhere that in years past insurance companies have posted profits right up there with the oil companies...Insurance companies sell fear(fear of getting seriously sick and not having the money to pay for it)...Most americans will be willing to pay just for that false sense/illusion of security

surveyorshawn
03-26-2010, 03:03 AM
My point in the post, Chuck, was that if I am wrong about how insurance companies chiefly make their money, then please explain to me how they do it. I can respond to each of the items you typed in blue, but a lot of it will just be one opinion versus another. I am not an insurance agent or broker, and never have been. My experience is basically this: I have been in the surveying/engineering/development business for about 15 years, and have been associated with it for a lot longer. During this time I have dealt with a lot of high level people with banks, investment companies, and insurance companies, as well as those who represent them, and have hung out with them, shot the bull with them, etc. I have handled deals, designed developments for Prudential, Colonial Penn, and several of the larger companies. Lots of them have made enough profits over the years to branch out into mortgages and real estate investments, etc., but that is NOT how they made their money, and that is not the chief way they continue to make it. Those are just some of they ways they are continuing to make their profits earn more money for them, which is certainly smart. I have nothing against insurance, insurance companies, or anyone making a profit legally. I am not mad or bitter at any insurance company and do not think I have been wronged by one. I have auto and homeowners' insurance, and well as E & O and Professional Liability (required for my profession). That still does not change the fact that the insurance companies sell policies to people banking on the fact that the majority of them will not need the policies. No moron would sell 1000 policies believing he was going to have to pay out on 900 of them. He would be in bankruptcy in short order. He is gambling, yes it is a gamble even though the gamble is based on projections and figures, that the majority of the policy holders will not get catastrophically ill. Just like when the insurance companies lost when Katrina hit here, health insurance companies CAN lose if something major happens like an outbreak or something weird like that. I can lose in my business if I don't play it smart, though it is a bit harder. At any rate, if I am wrong about how health insurance companies make their money, then please just simplify it and tell me how they do it.

Chuck
03-26-2010, 03:48 AM
My point in the post, Chuck, was that if I am wrong about how insurance companies chiefly make their money, then please explain to me how they do it. I can respond to each of the items you typed in blue, but a lot of it will just be one opinion versus another. I am not an insurance agent or broker, and never have been. My experience is basically this: I have been in the surveying/engineering/development business for about 15 years, and have been associated with it for a lot longer. During this time I have dealt with a lot of high level people with banks, investment companies, and insurance companies, as well as those who represent them, and have hung out with them, shot the bull with them, etc. I have handled deals, designed developments for Prudential, Colonial Penn, and several of the larger companies. Lots of them have made enough profits over the years to branch out into mortgages and real estate investments, etc., but that is NOT how they made their money, and that is not the chief way they continue to make it. Those are just some of they ways they are continuing to make their profits earn more money for them, which is certainly smart. I have nothing against insurance, insurance companies, or anyone making a profit legally. I am not mad or bitter at any insurance company and do not think I have been wronged by one. I have auto and homeowners' insurance, and well as E & O and Professional Liability (required for my profession). That still does not change the fact that the insurance companies sell policies to people banking on the fact that the majority of them will not need the policies. No moron would sell 1000 policies believing he was going to have to pay out on 900 of them. He would be in bankruptcy in short order. He is gambling, yes it is a gamble even though the gamble is based on projections and figures, that the majority of the policy holders will not get catastrophically ill. Just like when the insurance companies lost when Katrina hit here, health insurance companies CAN lose if something major happens like an outbreak or something weird like that. I can lose in my business if I don't play it smart, though it is a bit harder. At any rate, if I am wrong about how health insurance companies make their money, then please just simplify it and tell me how they do it.

Insurance companies make money by charging a premium to a large group of people (Law of large numbers) and using that premium to pay out claims (risk pooling) invest against future losses and to make a profit.

How they make their money was never the point of your original 2 posts I quoted or either of my 2 responses to your posts. My issue was with the frequent use of terms like "racket" "gamble" "win" "lose" "value" etc. Those comments and your perspective in general lead me to believe that you don't understand how insurance works or the purpose of it in the first place. I still stand by that opinion.

If you think insurance is a "racket" or that you would never get your "value" out of it unless you were very ill I'd love to hear your suggestions on how to fix it.

What needs to change so it's not a racket?

What do you think needs to happen so someone would get their value out of the premiums paid??

How can you call something a "racket" and mention things like "losing either way" and then say you have "nothing against insurance or insurance companies"... You paint the carriers and the industry in general in a completely negative light then claim to have nothing against them. :doh:

Buzzard
03-26-2010, 04:28 AM
Wow!! You've all been busy posting haven't you? I was out most of yesterday with a migraine and I've been trying to get caught back up with work this morning so forgive me for being late to respond and posting such a long response. To make it easier I'm just going to post my replies in Red. I know that makes it harder if you quote me but it's the quickest way. :)

My .02 for what it's worth. :cool:

Wait a darn minute, your replies are in blue.:laugh:

Chuck
03-26-2010, 04:38 AM
Wait a darn minute, your replies are in blue.:laugh:

:laugh::laugh::laugh::laugh:

surveyorshawn
03-26-2010, 01:12 PM
How insurance companies make their money was indeed one of many points I made in my initial posts in the old thread. Mostly I addressed it in the first post, rather than the second one, though. It was not the only point I made, of course. Frequent use of the word "racket"? I used it twice, lol. I used it one time in each of those first two posts. That's hardly frequent. Apparently there are a number people on here who share my views, because they certainly chimed in, on both threads.
"Gamble", "win", Lose", and "Value" are not bad words. They happen in the business world every day. Office Max took a gamble building in the town up the road from me, right down the street from Office Depot. It was a bad gamble, and they lost. I'm sure they based it on research, as they aren't stupid, but you take a gamble every time you take steps in business, because you can never accurately predict what is going to happen. You win, you lose.
I'm assuming that in my first post I offended you by my use of the word "racket." Perhaps that was a bit harsh, because it does have connotations of deviant behavior. That is not what I intended to convey, and I apologize for that.
I also assume, from your comments, that you are an insurance agent or broker. If so, then would you describe the value of the product or service that you provide as peace of mind? If so, then we are simply differing in opinion on what the value of insurance for dollars is. If peace of mind is the value, then if I pay my premiums and never need the policy, I've still gotten my money's worth, because the policy was there in case I got sick, got in a wreck, had a house fire, etc.
How can I say things like "losing either way" and then say I have nothing against insurance companies? It was a value statement, not a grudge one. Unless I say that I am ok with purchasing peace of mind, then I am not getting anything for my money unless I get sick. So, in that situation, I am losing by paying out if I don't get sick, and I am losing by getting sick in order to get the product I have paid for. However, unless I get catastrophically ill, I won't get back the value of the premiums I have paid in, unless I get very ill early in the coverage period.
I don't think I painted insurance carriers and companies in a negative light, I just called the way they make money like I see it. Really, I could say a lot of negative things about them, like trying to get out of paying claims, raising the rates of people who are sick, or dropping them outright, and all kinds of other bad practices that are very well known, but I steered clear of all that and focused solely on how they made money.
Now, how would I fix it to get the value of my money? Well, I didn't really offer information on a broken system that needed fixing. I gave my observations, that's all. If you are selling peace of mind, then I guess people will pay whatever it is worth to them. I can't make the math work for me right now, so for me, there is no way to fix it. Maybe when the economy is better the numbers won't matter so much to me.:)