insurance

I understand the basics of insurance. That is the transfer of risk. That insurance companies bet on getting more in premiums than they have to pay out in claims. What I'm trying to understand is, how deeply insurance, our ability to purchase it, affects our economy. Please if you could give me some answers regarding this or point me to a site where I can find more information it would be great.

In my opinion insurance is the under pining of our economy. You cannot obtain financing to buy a car, house, commercial building, commercial equipment, boat, airplane, condominium, etc. without showing proof of coverage to the bank since they want the asset which serves as collateral to the loan fully protected against loss. You should not employ someone without obtaining workers compensation insurance. Even if you do not obtain financing it would be foolish and in many cases illegal to go without insurance. Banks will also require key man life insurance on the executives of a company when they are making large loans to the business. And of course unfortunately in most cases you cannot get the best medical care without insurance since most of us cannot afford even a small hospital stay. Most employees appreciate all types of benefits most of which are provided through the insurance companies. Life insurance proceeds also provide for the lifestyle of many families who have lost their loved ones--the ability to keep their houses, send their children to college, etc. Payment of claims also helps to provide for lost wages, payment of medical bills and make up for the loss of lifestyle by parties injured in accidents.

Insurance companies also invest some of the excess premiums to provide the financing for many real estate projects such as apartment, condominium, office and retail buildings. They also invest in stocks, mutual funds, bond markets, etc. Basically without insurance companies our economy and the economy of the majority of countries would grind to a halt.

And of course like any business they are in it to make a fair return on the investment while balancing a public service.

www.insure.com

great website, tons of information, especially www.insure.com/articles

The drive or desire to make money fuels our economy.However, there is always the risk of something bad happening.

Insurance substitutes the risk of a big, uncertain loss, ( accident, fire, injury) to one, for a small, certain loss ( the premium( to everyone.

Imagine, a fire to your home could financially wipe you out, but the cost of fire ins is something that could be budgeted for.,

We give our energy to the insurers with the belief we will lose (property, health, life). They are betting on we won't. They come out ahead (have you ever seen insurances companies give money back because you didn't claim). This effects the economy because we expect bad things (how else do we get our money back). Build a profit margin into the equation and now the companies look for ways to decline payments. What kind of stress does this put on us, the economy. Rates keep going up, not down. The middle class is looking at forking over 30-40% of their income just to be insured. This isn't happening so you have 47 million uninsured in the health sector. And just like cars...they want to mandate you have this insurance (ya lets give them somemore of what is left of our money). If you want to build a safety net for society (insurance), make it reasonable, take out the profit margin and greedy necessity to make money. Reward those that don't claim, the money acumulated (payed in should not just go to the insurers), stop making this a game that the average joe loses.

Give us our money back

Think about what happened after September 11th. The insurance companies had not insured themselves against such a traumatic loss of life and property. If the federal government had not created the Victims fund, where families gave up their right to sue the airlines or anyone else who was liable for the tragedy, the insurance industry would have collapsed. Now they are preparing better, but we have been paying higher insurance premiums and insurance companies are excluding terrorist attacks, so you have to purchase insurance from the government, just like flood insurance.

In some ways, the reason why it took close to 5 years for our economy to recover from the September 11 attacks is because the increased premiums had to be passed on to the consumers.

Insurance has a huge effect on our economy. People and companies are normally unwilling to assume the risk of large financial losses when engaging in a project or investment without some kind of insurance protection behind it. Professional practitioners; i.e. doctors, lawyers, etc., retail establishments and manufacturers don't want to open their doors, hire employees or ship their products without financial protection from catastrophic loss or a litigious society. While insurance companies get the blame for high health insurance rates, the cause of those rates is based on the high cost of claims and litigation. Insurance companies were never started as a social institution that should just eat their losses and be quiet. They're in business to make a profit just like any other business. If the cost of the losses from a hurricane is in the billions, shouldn't the people most susceptible to such a loss share in the cost, in the form of the premiums they pay? And if people don't want to pay such high premiums, they are less likely to move to or locate their businesses in such places. If medical practitioners are the most likely targets of multi-million dollar lawsuits, shouldn't they share in the ultimate cost to the insurer who pays what the court awards? And if doctors have to raise their fees to cover the cost of the increased premiums, the ultimate cost of medical care reverts back to health insurance companies who are paying the claims and who have to raise their premiums to cover their costs and still stay in business. Employers who provide group health insurance and private citizens who desire healthcare insurance will feel the pinch which will affect their bottom line and liquid assets; which affects the economy.