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Fair winds!

Dave and Anke
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Wednesday, February 15, 2012

What does Insurance Ensure?

We call this kind of fish feed (BOTH colors)...
Pic shot from predator POV.
INSURANCE, n. An ingenious modern game of chance in which the player is permitted to enjoy the comfortable conviction that he is beating the man who keeps the table.
 From The Devil's Dictionary by Ambrose Bierce

The following dialog is from the same source. I've edited it to apply to boats, and updated terms and a few of the more prolix phraseologies:

INSURANCE AGENT: Captain, that's a fine vessel-- let me help you insure it.

BOAT OWNER: With pleasure. Please make the annual premium so low that by the time when, according to your actuarial tables, it will probably be lost to misadventure, I will have paid you considerably less than the amount for which I am insured.

AGENT: Hold on, Friend; we could not afford to do that. We must adjust the premium so that you will have paid more.

BOAT OWNER: How, then, can I afford that?

AGENT: Why, your boat may sink at any time. There was the TITANIC, for example, which --

BOAT OWNER: Spare me. There were the ALMA, on the contrary, and CURLEW, and SERAFFYN, which --

AGENT: Spare me!

BOAT OWNER: Let us understand each other... You want me to pay you money on the supposition that something will occur prior to the time set by yourself for its occurrence. In other words, you expect me to bet that my boat will not last so long as you say that it will probably last.

AGENT: But if your vessel is lost without insurance it will be a total loss.

BOAT OWNER: Excuse me, but by your own actuary's tables I shall probably have saved, when it is lost, all the premiums I would otherwise have paid to you -- amounting to more than the face of the policy they would have bought.

But suppose it to sink, uninsured, before the time upon which your figures are based. If I could not afford that, how could you if it were insured?

AGENT: Oh, we should recoup our losses from our luckier ventures with other clients. Virtually, they pay your loss.

BOAT OWNER: And virtually, then, don't I help to pay their losses? Are not their boats as likely as mine to be lost before they have paid you as much as you must pay them?

The case stands this way: you expect to take more money from your clients than you pay to them, do you not?

AGENT: Certainly; if we did not --

BOAT OWNER: If you did not, I would not trust you with my money.

Very well then. If it is certain - with reference to the whole body of your clients - that they lose money on you, it is probable - with reference to any one of them - that he will. It is these individual probabilities that make the aggregate certainty.

AGENT: I will not deny it -- but look at the figures in this broch--

BOAT OWNER: Forget it!

AGENT: You spoke of saving the premiums which you would otherwise pay to me. Will you not be more likely to squander them? We offer you an incentive to thrift.

BOAT OWNER: The willingness of A to take care of B's money is not unique to insurance, but as a charitable institution you deserve applause... CLAP. CLAP. CLAP.


Insurance is an Odd Duck, whether it's for the boat, health, social security (not a hand-out, BTW), life or so on. The best outcome, for both insurers and the insured, is that none receive the services purchased.

In our modern, byzantine environment of bean-counters and hired legal thugs, this can take a twisted turn. The claims of the insured, as individual customers, are easily dismissed or eroded on papery pretexts. Despite an assortment of warmly smiling members of the upper crust,  perky albino goth girls, cavemen and talking animals appearing in their ads, Insurance is a ruthless corporate machine, dedicated to extract as much of your money as possible in return for as little as possible. Someone's got to pay for the chrome on their skyscraping headquarters and shareholder profits.

To be uninsured requires some hard decisions in cost/benefit analysis.

What are the likely risks? How much can preventative care and self-help offset costs? I can't fill my own tooth cavities (or anyone else's), but I can brush and floss. I can't perform an apendectomy, but I can set a broken bone. I can't perform open heart surgury, but I can eat sensibly and manage stress. I can't live indefinitely, but I can accept 'death by natural causes' when my time comes, without heroic measures merely prolonging the inevitable. Until recent years, this was the not so terrible case for all.

[ Heal the wound and cure the illness, but let the dying spirit go. Wisdom from A Wizard of Earthsea by Ursula K. Le Guin... a kid's book, for crying out loud!]

Somewhere along that spectrum is a point where one's pocket fails. Can we accept the consequences?

As sailors, we accept and manage risk with every league under the keel. We gear up and train ourselves to deal with emergencies, because we have left the nest. Our insurance is on board. We accept the risk of damage or even loss of life and property should our resources fail. A later settlement avails us not. Day late, a dollar short.

How much further a step is it to carry this into our lives entire? How much of our one precious life, of which money is a mere byproduct, are we willing to spend insuring what remains? The obsessive pursuit of security can squander what we hope to ensure.


PS. Of late, there's been a widespread tendency to tar the uninsured as a swarm of leeches. It is accepted as if true that the insured are somehow supporting the uninsured.

Of course, we who are neither insured nor on public aid (a separate issue) eat our losses, and pay full price for required services, out-of-pocket. We are the clients of the service providers we engage.

If you are insured, you are your insurer's client, and they engage service providers. And they have market clout. Insurance companies negotiate with service providers for lowered prices. Sweetheart deals (aka, economies of scale). Guess who pays for those savings...

Who is supporting whom?


  1. Well said, well put, and well done!

  2. As one who has been legally beaten out of thousands of dollars in benefits one would suppose might be covered by insurance (and were, in fact covered, at face value), I attest that the insurance "industry" is fraught with crooks and liars with no moral compass.
    There is coming, in the not too distant future, the inevitability that if you can't afford insurance, or your boat doesn't qualify (ie, you built it yourself) then you will not be able to moor in a public marina anywhere. Or, if you could find insurance coverage, it might cost more than your boat.

    All more fuel for some of your other self-sufficiency theories. Somehow, in this new paradigm of individual responsibility, there must be a mechanism for dealing with a litigious society and "lawful" extortion by legal, yet predatory corporations.


    1. Hi Michael,

      Yes... it's a squeeze play. No insurance, no admittance. But at the same time, public waterways outside of marinas are being claimed and controlled by bureaucracies at all levels. 'Hazards', 'eyesores' and 'vagrants' are being swept from the scene as fast as their little pens can scribble.

      I don't know if there is a mechanism, per se... working within the system to change the system hasn't been a winning strategy. Nor has opposition from without shown much promise.

      I'd like to think that We the People might organize and dismantle corporate power. But my guess is that we've committed ourselves to a process that is now beyond anyone's power to avert. A process in which all this abusive dynamic is merely sweating small stuff.

      I believe that we're all - individuals, communities and corporations - riding the exponential express toward an abrupt and spectacular threshold, beyond which all the insult and assault of the present will seem like small potatoes.

      If that's true, the good news is that practicing independence and self-sufficiency this side of the abyss is both a pleasure in the present, and the best possible preparation for the future.

      We live in interesting times!


  3. As one who has been saved hundreds of thousands of dollars by medical insurance with a sick child I tend to come up with a different answer. But if I didn't have kids.. hmm. I dunno. Boat insurance? Forget it. medical? It is SO expensive, but so, too, can the consequences of not having it! To each our own! Bryan

    1. Hi Bryan,

      It's a tough question, given the financial options available. Each has to assess their situation.

      I'm one who believes that medical care is a right, on the one hand, and an excellent investment by the People IN the People on the other.

      As a right, I believe the provision of health and medical care to be one of the first returns we should demand on the licensing of commonwealth resources.

      As an investment, I believe it's morally and financially ludicrous to hold that the balance sheet favors letting citizens (or our fellow human beings, for that matter) go without adequate care.

      Ditto food, shelter and education. After THOSE needs are met, we can start quibbling over how to spend the rest.

      So my problem is not so much with the concept of insurance, but rather with insurance as a profit-center... the ensured and uninsured both being fleeced on behalf of shareholders and recipients of corporate perks.

      Ol' Ambrose not withstanding, I think it's a good idea to pool our resources in order to average risk. It could, and I believe should, be financed from revenues generated off the commons. But really, that's another conversation about an alternate universe.


  4. SocSec IS a handout. Entitlements are not a contractual right.
    "One of the most enduring myths of Social Security is that a worker has a legal right to his Social Security benefits. Many workers assume that, if they pay Social Security taxes into the system, they have some sort of legal guarantee to the system's benefits. The truth is exactly the opposite. It has long been law that there is no legal right to Social Security. In two important cases, Helvering v. Davis and Flemming v. Nestor, the U.S. Supreme Court ruled that Social Security taxes are simply taxes and convey no property or contractual rights to Social Security benefits."

    1. Hmm. I think we agree in principal, though perhaps not in terminology.

      I'd maintain that Supreme Court ruled (for its various reasons) the wrong way - against the spirit of Social Security as (fraudulently) presented to the public, and that the legal lack of contract (and therefore property status of benefits) is as you state.

      Still, it whatever benefits do appear seem no more a hand-out than any other property in this Land of Eminent Domain (also SC approved), 'fair market compensation' notwithstanding.

      Though I'm able to cheat party B at a time of my choosing, it doesn't make payments to B (in understood return for considerations) a 'hand-out', to my way of thinking.

      I note in most (private) insurance (and other) contracts the fine print which allows unilateral changing of terms and conditions at any time without prior notice. This, to me, says, "This contract is no contract." I tend to cross that kind of language out and initial it, for all the good it will do me.

      So, this is an interesting discussion, though beyond what I'd intended for this post. As relates to that subject, I'd say it just underscores the theme of caveat emptor and DIY.

      Dave Z

      PS... Another pet peeve: SS also demonstrates the problems of projecting and building on the expectation of perpetual growth, a problem beguiling We the People, private or public.