Insurance and Bookmaking....
Although both are gambling, there are some serious differences among which are the size and duration of the bets. It's usually easier to collect on a win from your local sports book than it is to clear an insurance claim though.
Also, the complexity of the bet will be much higher with insurance...there is an incentive to cloud, obfuscate and otherwise deceive with legalese policies and agreements designed to exclude the exact thing you are trying to claim for.
I have an insurance policy through one of the Blues where I work. I am a lucky guy, as without insurance, some health issues I've had would have bankrupted me easily, and all of my paycheck would be garnished by the medical industry and the credit card companies I pay the bills through.
I have a serious issue about the policy. It's too damn complicated. I cannot understand the math used to compute what the insurance pays for, or won't pay for.
Take, for instance, two specialists I visit. One has a private office. When I visit him, I pay a $30 copay on the spot, insurance covers the rest after I pay the annual deductible. The other, who has his practice in a hospital, is quite different. After deductions for co-insurance, I get a bill for about $54 from the doctor's practice. Later, I also get a $38 bill for the portion of the doctor's facility charge from the hospital. This is under the same policy that says I have a $30 copay when visiting a specialist. I call both the doctor's bookkeeper and the insurance company, and they both assure me I am being billed an appropriate amount, and I simply do not understand the rules.
I lost it. The poor woman on the phone at Anthem got an earful about what lousy bookies they were.
You see, if I go to a sports book, the rules of the bet are absolutely clear--the results of a misunderstood bet are often violent and personal. They want me to understand that if I get Denver and 3, I win my bet if Denver loses by a safety. They are also very clear on how much I stand to win or lose on a given bet. They make their money on balancing the action on both sides of a contest and changing the spread as needed to make sure they have prospective winners and losers roughly equal, and make their money either as a percentage of the bet or by taking a point or two in the middle of the spread.
Insurance companies work the spread as well, but they use actuarial statistics instead of points. They measure the likelihood of a disaster versus the likelihood of life-as-usual over long periods of time. They do not have the luxury of balancing bets on both sides--but they do have the advantage of being able to change the terms of the bet unilaterally. They also get to hold the bet, which they then take and gamble themselves, either in the stock and bond markets, or in other investments. This "float" on bets payable and premium received is a very important part of their income.
They also make a large amount on convincing people that they are covered for damages that they actually have no intention to cover. Ask a Katrina victim who had their home destroyed by storm surge about whether the wind that pushed the wave was the cause of the destruction or not.
A modest proposal: Let's have insurance companies phrase their policies as bets--Your car gets wrecked; we fix it. You get sick--we pay the costs over X dollars. Your house burns down, we rebuild it (unless you set it on fire on purpose). Make all exclusions as clear as the large print benefits--in other words, a clean bet. Furthermore, establish in law a principle that such policies must be easily comprehensible by the poor working slob that ultimately pays for them. If they aren't, penalize the person that writes the policy with a punch in the face or a broken leg--the penalty for being a bad bookie.
Also, the complexity of the bet will be much higher with insurance...there is an incentive to cloud, obfuscate and otherwise deceive with legalese policies and agreements designed to exclude the exact thing you are trying to claim for.
I have an insurance policy through one of the Blues where I work. I am a lucky guy, as without insurance, some health issues I've had would have bankrupted me easily, and all of my paycheck would be garnished by the medical industry and the credit card companies I pay the bills through.
I have a serious issue about the policy. It's too damn complicated. I cannot understand the math used to compute what the insurance pays for, or won't pay for.
Take, for instance, two specialists I visit. One has a private office. When I visit him, I pay a $30 copay on the spot, insurance covers the rest after I pay the annual deductible. The other, who has his practice in a hospital, is quite different. After deductions for co-insurance, I get a bill for about $54 from the doctor's practice. Later, I also get a $38 bill for the portion of the doctor's facility charge from the hospital. This is under the same policy that says I have a $30 copay when visiting a specialist. I call both the doctor's bookkeeper and the insurance company, and they both assure me I am being billed an appropriate amount, and I simply do not understand the rules.
I lost it. The poor woman on the phone at Anthem got an earful about what lousy bookies they were.
You see, if I go to a sports book, the rules of the bet are absolutely clear--the results of a misunderstood bet are often violent and personal. They want me to understand that if I get Denver and 3, I win my bet if Denver loses by a safety. They are also very clear on how much I stand to win or lose on a given bet. They make their money on balancing the action on both sides of a contest and changing the spread as needed to make sure they have prospective winners and losers roughly equal, and make their money either as a percentage of the bet or by taking a point or two in the middle of the spread.
Insurance companies work the spread as well, but they use actuarial statistics instead of points. They measure the likelihood of a disaster versus the likelihood of life-as-usual over long periods of time. They do not have the luxury of balancing bets on both sides--but they do have the advantage of being able to change the terms of the bet unilaterally. They also get to hold the bet, which they then take and gamble themselves, either in the stock and bond markets, or in other investments. This "float" on bets payable and premium received is a very important part of their income.
They also make a large amount on convincing people that they are covered for damages that they actually have no intention to cover. Ask a Katrina victim who had their home destroyed by storm surge about whether the wind that pushed the wave was the cause of the destruction or not.
A modest proposal: Let's have insurance companies phrase their policies as bets--Your car gets wrecked; we fix it. You get sick--we pay the costs over X dollars. Your house burns down, we rebuild it (unless you set it on fire on purpose). Make all exclusions as clear as the large print benefits--in other words, a clean bet. Furthermore, establish in law a principle that such policies must be easily comprehensible by the poor working slob that ultimately pays for them. If they aren't, penalize the person that writes the policy with a punch in the face or a broken leg--the penalty for being a bad bookie.
posted by Drunkenrantz at 8:37 PM
1 Comments:
Glad to see that you are writing again. You make some very good points here. Don't forget that insurance companies are behind almost every law creating a victimless crime--they are doing whatever they can to avoid having to pay up on their bets.
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