CDR: Re: why should it be trusted?

[Ray Dillinger]

On Wed, 18 Oct 2000, Nathan Saper wrote:

>> So these people are entitled to something for nothing?
>> (or in this case, $1500 of treatment for $1000 of premiums)?
>
>That's the whole idea of insurance, isn't it?
>

You're trolling, aren't you?  

Insurance is a good idea for the insured because it takes 
money to make money.  If you have any investments, any 
property, etc, which you *rely* on for your livelihood 
or your lifestyle, insurance is a way of knowing that you 
will continue to have, and being able to make plans based 
on having, those items into the future even if a disaster 
of some type hits.  It's a trifle *MORE* expensive than 
just paying for the disaster, but it's money where you can 
budget it because you know when and how much you'll have 
to pay. 

Insurance is a good idea for the insurer because the 
insurer does business with a large enough number of 
people that paying for the fifteen or twenty actual 
disasters that happen in a given day can be done 
routinely out of the fifteen or twenty thousand premium 
payments received that day, with some money left over 
for lunch.  As the numbers get larger, the disasters 
become more predictable.

Nowhere in this business model is there any shred of 
entitlement or obligation.  The insured is not entitled 
to coverage.  The insurer is not obligated to write a 
policy on someone who has risk that makes the policy 
too cheap for the insurer to make money.  

				Bear