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Is insurance beneficial to the common man? PDF

Archive project "Radio Liberty this week 20 years ago". The most interesting and significant from the archive of Radio Liberty twenty years ago. Unfinished story. Still living hope. Could Russia have gone the other way?

Insurance business. Face and underside. The program includes: Tom Stonberg-President Of the Association of independent insurance agents, Ben Seiker-employee of the National center for public policy research, Joe Amado-employee of the information Bureau on insurance. Author and presenter Marina Efimova. First aired on April 15, 1997.

Marina Efimova: in the Comedy" Fortune Cookie " - "Cookies with the prediction of the future" - the popular American comedian Jack Lemmon plays an honest cameraman who was in a small car accident and received several bruises. And another popular comedian, Walter Matthau, plays his son-in-law, lawyer Willie. Immediately after the accident, Willie appears in the emergency room of the hospital, where his son-in-law was examined, and tells him the news.

Speaker:

"So your spine is damaged." His left leg was numb and three fingers of his right hand were numb.

"What nonsense! - says the victim. "I'm not numb!"

"Of course not," Willie says, " if you want to lose half a million dollars."

"What are you talking about?"!

- About the insurance payment on the court. We're suing the insurance company for half a million. Yes, and don't forget that your eyes are double. Got it?" How many of me do you see?

"One," Lemmon says. I see a thieving lawyer who happened to marry my sister.

"You dare tell me that?" Me, who brings you a million on a silver platter? Do you feel sorry for the insurance company? This company has so much money they have no place to keep it, and they put it in microfilm. Half a million is pocket money to them, so please don't try to impress me with your squeamishness.

Marina Efimova: the Rumor about the wealth of insurance companies is not far from the truth. As one of the main researchers of this business Andrew Tobayos writes in the famous book "Invisible bankers", the capital of all insurance companies in America in 1981 amounted to $ 700 billion, that is more than the combined capital of the 50 largest American industrial corporations. Is it worth it, as Willie's lawyer reasonably pointed out, to feel sorry for the insurance companies? And in General, who deceives whom in this business? Andrew Tobios, on the one hand, cites a typical case where a young man needed to pull out a wisdom tooth for $ 82, but the amount was so small that the health insurance did not pay for it, and to save his own money, the young owner of the wisdom tooth pulled it out in the hospital under General anesthesia for $ 540, and

Don't you feel sorry for these people?", "Boyer was asked. "Not at all," he replied imperturbably, " my sympathies are never on the side of the opponents, they are always on the side of those who pay me

On the other hand, the same author describes an even more typical and well-known new York lawyer for insurance companies, Boyer, who, being an extremely skilled and experienced lawyer, regularly "excused" insurance companies from paying disability compensation to people who were blind, paralyzed or maimed, despite the obvious guilt of the doctors, hospitals or businesses in which they were injured. "Don't you feel sorry for these people?", "Boyer was asked. "Not at all,"he replied, imperturbably;" my sympathies are never on the side of my opponents; they are always on the side of those who pay me." The first Chapter is one of the popular books on insurance, called "The biggest game in the world", opens with, as an epigraph, the words of a famous American financier Paul Kabata, said, "I know nothing about insurance, except that it is in any case not be contacted". Q: can we afford not to mess with insurance? Alas, no. And first of all because in America there are two types of insurance: voluntary and compulsory. Tom Stonberg, President Of the Westchester County Association of independent insurance agents in new York, said. Tom Stonberg: both types of insurance, compulsory and voluntary, are regulated by governments and state laws, they are not very different from each other. For example, if you have a car, you are required to insure it, although in each state the price will be slightly different.

Marina Efimova: Or if I buy a house, I have to insure it, right?

Tom Stonberg: No, if you paid for the house right away and it's completely yours, no one can force you to insure it. Another thing is that it would be stupid not to do it. However, this remains at your discretion. But if you take a loan from a Bank to buy a house, then the Bank obliges you to insure the purchase.

Marina Efimova: so smart banks don't seem to be risking anything? We're the only ones at risk. And what other types of compulsory insurance are there?

Tom Stonberg: it also depends on the state. In new York state, every registered business with employees is required to buy insurance for its full-time employees and workers in case they are injured in the workplace. In addition, in new York, every business is required to have health insurance for the employee and pay for his sick days.

Marina Efimova: it would Seem fair. Especially when you put yourself not in the place of a businessman, but in the place of an employee. But here's what critics of the modern insurance system write, including the well-known consumer advocate Ralph Neidor in his book " how to win the insurance game."

Speaker: small business Owners are forced to buy insurance not only for their employees, but also in case their visitor, client, buyer has an accident on the territory of their enterprise or institution. Doctors should buy insurance in case of trial for improper treatment. In recent decades, thousands of small businesses have been forced to close because of the overwhelming burden of so-called insurance premiums, that is, insurance premiums. Larger companies, with a large range of goods or services, in order not to go bankrupt or just not to reduce profits, gradually raise the prices of goods and services. On average, the American family pays annually insurance premiums 3 thousand dollars directly and another 4 thousand in disguise, overpaying for goods and services. This represents more than 12 percent of all family expenses.

Marina Efimova: let's Return to the conversation with independent insurance agent Tom Stonberg. When we talk about compulsory insurance, what is the insurance business in this case? Is it part of a market economy or is it already a command economy, that is, partly a socialist economy? Tom Stonberg: it's different in different cases. Take workers ' compensation, that is, compulsory insurance. Prices for it are set by government commissions so that in any insurance company they will be the same and, it would seem, the businessman does not care where to buy it. However, in order to lure the buyer to themselves, insurance companies have come up with discounts – the more employees you have, the more insurance policies you buy, the greater the discount the company promises you.

...to raise the price of car insurance, the insurance company must prove to the government Commission that it suffers losses and, in General, show convincing reasons why it considers it necessary to raise the insurance policy in this state

As for car insurance, the prices for it can be different, and the government only makes sure that they do not exceed reasonable limits. For example, in order to raise the price of car insurance, the insurance company must prove to the government Commission that it suffers losses and, in General, present convincing reasons why it considers it necessary to raise the insurance policy in this state. So in this area, the insurance business is a market mechanism with partial regulation. In short, it is a mixture.

Marina Efimova: Many, however, believe that this market-socialist hybrid is easily overgrown with bureaucracy, is not effective, is greedy for corruption and is dangerous for the economic health of society. That said, for example, an employee of National analytical research center of public policy Ben Seiker.

Ben Seiker: the only problem is that the state is trying to dictate its laws to the market. I do not see any serious reason for the government to regulate the insurance market, whether it is a question of automobile, medical or other insurance. Any obligation, any interference in the relationship between the producer of services and the consumer leads to a deformation of the market, for which you always have to pay more. I hope the state realizes this and Central regulation will be reduced, although it is difficult to predict anything.

Marina Efimova: in America, many believe that it is because of the half-hearted nature of insurance for twenty years, the price of medical care has increased by forty percent. And many firms, institutions buy health insurance for their employees, for example, paying not 80 percent of medical expenses, as twenty years ago, but only 70. And recently, even the President had to intervene, demanding that maternity hospitals insurance companies paid for at least two days of stay, and then they managed to push out before. Here's how Joe Amado, a member of the special insurance Information Bureau, comments on the situation.

Joe Amado: the Problem with the American insurance system, some see that it is given as if at the mercy of the state authorities. States are often helpless against powerful insurance companies. The Federal government could better protect the interests of the consumer. Others do not agree with this and believe that local authorities, that is, state authorities, better serve the interests of both consumers and the insurance business, they can react faster to changes in the situation, they are closer to the needs of the residents of their state. Because the specifics of insurance in California, where earthquakes often occur, or in Louisiana, where floods follow one another, or in cold Alaska are quite different than in arid Arizona or rainy Washington state, or in hurricane-stricken Florida. And General Federal rules for all will not benefit the consumer in most types of insurance.

Marina Efimova: and through what mechanism do insurance companies influence the government? They have a lobby, I suppose?

Joe Amado: Yes, both insurance companies and associations of insurance agents are engaged in lobbying, and quite actively. For example, some members of Congress want to take away from insurance companies the right to offer their customers forms of cash savings, exempt from taxes, the so-called "anyuitis". In this form, the person undertakes not to withdraw his contribution during the period stipulated by the contract, say, seven years. Some congressmen in search of additional funds for the state budget are in favor of levying taxes now, not someday. This could cost insurance companies significant revenue, and the consumer will have less opportunity to legally hide their money and pay less to the Tax office. Lobbying is a natural form of protection in a society of free enterprise and open competition. So it is possible to improve the insurance system first of all by easing restrictions and rules, by stimulating competition, and not by strengthening the control over this government bureaucracy.

Marina Efimova: it Seems that the dual situation saves the insurance business from such a serious control of the state. Andrew Tobios described several attempts by the government to limit this business and its profits.

When President Jimmy Carter invited the heads of the 25 largest insurance companies to a meeting in 1979, seven of them refused to come, pleading employment

Under democratic President Jimmy Carter, the Federal trade Commission began investigating insurance companies, but their lobbyists succeeded in forcing the Senate Commerce Committee to stop all investigations by secret ballot. And when, in 1979, the same President, Jimmy Carter, invited the heads of the 25 largest insurance companies to a meeting, seven of them refused to come, pleading employment. Tobios writes:

Announcer: of Course, this meeting could hardly make any drastic changes in the insurance business, but it seems mysterious what business or meetings the heads of these insurance corporations had, that they could not cancel them, saying: "Sorry, but I was summoned by the President of the United States."

Marina Efimova: I don't want the audience to get the impression that Americans are forced to buy all their insurance policies. Do not forget that among the insurance - a huge number of voluntary, including the main thing-life insurance. In the 80 years, the magazine "Playboy" made a survey of two thousand American men: what in their lives they consider a necessity? And 79 percent considered life insurance necessary. Although only 60 percent of those surveyed were married. In America typists insure fingers, singers and announcers – voices, ballerinas-feet. Members of the heaven's Gate sect who had recently committed mass suicide were buying insurance against alien abduction. This included insurance not only in the event of death, but even in the event that a female member of the sect becomes pregnant by an alien. The group insurance cost them a thousand dollars a year, and the payments were supposed to be one million per person. People are insured against vampires, from ghosts and from the folklore of the English monster Werewolf. A lady recently bought insurance in case she had an immaculate conception and gave birth to the second Son of God. And we can not say that for insurance companies it is absolutely pure profit. The same company that insured members of the sect "Gates of Paradise" last year paid another client 1.7 million for the injury caused by aliens. The client presented as evidence photos and own shoulder with traces of claws of the unknown creature. In the book of Edget Bayes presents a table of what percentage of the total number of insurance policies buys the population of a country. Japan – 11.6%, it is the second country in the world in terms of consumption of insurance, West Germany-10.6%, England-6.3%, and so on, in descending order. And the US consumes 44.7% of all insurance policies in the world. So Americans like to be insured. No wonder the English traveler Cecil Beaton in a book about America wrote:

Salvage property during flooding

Announcer: "Americans firmly believe in the ability to control the fate of material means. By insuring airplane flights, they successfully replace the fear of death with the vision of a comforting wad of cash."

Marina Efimova: let's Return to our conversation with independent insurance agent Tom Stonberg. What trends have been observed recently in the insurance business?

Tom Stonberg: as an independent insurance agent, I am concerned about the trend of consolidation of insurance companies. They merge, merge capital, begin to operate not only as insurance companies, but also as bankers, investment firms, brokerage houses, and so on. We are afraid that as a result of all these enlargements they will lose sight of the client. That is, they become so independent of the small customer that they simply will not accept poor buyers of insurance policies, owners of small houses and cheap old cars. In the state of new Jersey, for example, as you probably know, they have already brought the payments for car insurance to such an extent that the Governor of the state Christine Whitman was forced to demand a reduction in these amounts. But the lawyers, the lawyers who make up the majority Of the congressional staff, have prevented her from doing so because their interests coincide with those of the big insurance companies. Their main income they receive from the courts associated with car accidents and insurance payments. So if the insurance companies in their trend of consolidation do not behave cautiously, they will end up forgetting about the consumer.

Marina Efimova: a Cheerful prospect. Mr. Amado, how do you view the expansion of insurance companies?

Joe Amado: this is a very serious issue Right now. In the late 20s and 30s, when the stock exchange collapsed due to the depression, a law was instituted that strictly delimited the functions of financial institutions. But today the boundaries between banks, brokerage firms and insurance companies are blurred. I think soon there will be a law allowing banks to sell insurance policies, and insurance companies to take over the functions of the Bank. And in this area too - the wider the competition, the better for the consumer and for the companies themselves.

Marina Efimova: Mr. Stonberg, one of the main complaints against insurance companies is that, acting in some way as bankers, saving for us our money in case of accident, they return to the client a much smaller percentage of his contribution than, say, the Bank. If there our money even grows, then in insurance companies to the client, according to the calculation of the chief researcher Andrew Tobayos, returns only 67 percent from each dollar. That is, the company's profit is more than 30 percent.

Tom Stonberg: it depends on the state and the situation. For example, in some States, governments regulate prices so severely that companies begin to lose revenue and this business becomes unprofitable. And one more extremely important detail. For example, insurance companies operate for years with great profit, successfully invest money and so on. And suddenly an earthquake in California or a hurricane in Florida, a flood in Mississippi, snowstorms in new York. In Florida, after the hurricane, insurance companies just rebuilt an entire state. And the same thing happened a few years ago on long island, near new York, where overnight the waves lapped up the entire coast-houses, embankments, piers, sections of highways. So much for profit. All of it, with all the investments and interest, could be wiped out by one hurricane Andrew.

...you are a good, neat driver, you do not get into accidents and for years, decades pay a lot of insurance for the car almost in vain

But of course I have to admit that for individuals, insurance is a terrible injustice. For example, you are a good, neat driver, you do not get into accidents and for years, decades pay a lot of insurance for the car almost in vain. Your money pays for the expenses not only of victims of accidents, but also just bad drivers, drunk drivers, reckless youngsters, crazy old ladies, and so on. Some pay for the misfortunes and crimes of others.

Marina Efimova: What should we, mere mortals, buyers of insurance policies do? Some say: do not buy any insurance policies except those prescribed by law, as long as this law exists, do not let insurance companies profit at your expense, catching the hook of fear. On the other hand, chief scientist at the insurance mazes Andrew Tobias writes:

Announcer: they, the insurance companies, want insurance to seem like the most boring thing in the world to us, and they've achieved that. Do you know the story of the great John MacArthur, head of the insurance company "Market life". He started with a tiny company whose customers were a hundred old men. MacArthur hid from debts, signed unsecured cheques, ran from court officials until he came up with a brilliant idea: he drew up a seductive and complex contract in which all the main hooks and traps were hidden in paragraphs written in small print. With the help this Treaty gained new customers and later ten years became the main landowner in Florida, master hotels, banks and oil wells,and registered billionaire. However, his brother, also an insurance company owner, said: "the blackest day of the insurance business is the day my brother joined the business."

Tobios ' advice: Read what's written in the small print.

Marina Efimova: Mr. Stonberg, what do you, as an independent insurance agent, advise us?

Tom Stonberg: Be a sensible buyer. You must either learn all the wisdom of the insurance business, or find among the agents of a person whom you would completely trust. No one knows better than I how unpleasant it is to pay in advance and yet in case of misfortune, fire, robbery, chronic illness, no one will save you from ruin, if you do not insure yourself.

 

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0 #1 john smith 2019-12-09 11:07
Is insurance beneficial to the common man?
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