We have all been subjected to some sort of scam in our lifetimes. It could be thinking that an -mail announcing you won millions of dollars in some obscure lottery was real and you forwarded the information. It could have been trying to outwit a three-card Monte dealer on a New York sidewalk. It might have been going to a fortune tell or a séance and believing the sounds and prognostications were real. I know what you’re thinking: “I’ve never fallen for any of those scams.” Maybe not. But here is one outrageous scam all of us fall for. It goes by the name of “auto insurance.”
“Now, wait a minute,” you say, “isn’t this industry somehow regulated?” Not really. But, even if the state mandated dollar amounts for premiums, the scam works. Here’s how. You’re covered for an accident. The insurance usually covers costs above a deductible you’ve chosen. Well, you say, that’s not a scam. Here’s where what I consider a scam enters: You’re paying a lot of money to be insured in case of an accident. But the insurer doesn’t lose any money, because for every accident you have they raise your premium. Literally you are insuring yourself and in the long run, you lose! Insurance companies pay out, but, month after month your increased premium replenishes their coffers. This does not include the monthly fee you pay in case you don’t pay the huge amount all at once. Imagine, someone telling you that you pay to pay extra when you pay the monthly amount. Suppose you go to a 7-11 and buy a bottle of cola. You pay the amount and then the clerk says, “Hey, you owe another dollar for my handling what you just paid me.” You’d tell him to take his soda and put it back where the sun don’t shine. Silly? Not when it comes to insurance.
Oh, and here’s another truly reprehensible way the insurance companies scam you. Personal example: A year ago last Christmas Eve, we were stopped on the Ten by an angry CHP, angry because she had to work on a holiday. She brooked no excuses (we weren’t really going that much over the speed limit). There was no accident. No injury. No damage to the car. But now, thanks to California state regulations, my premium will increase FOR THREE YEARS. The insurance scammers see me as a “dangerous driver.” They haven’t spent a dime. But I will have to spend dollars. Back to that 7-11 example again. You buy a soda. The clerk wants an extra dollar. Why? You’ve been drinking a lot of soda lately, might cause diabetes which means you can’t drink sugary sodas and the store will lose your business. They just want to protect their bottom line. Stupid? Of course. But, tell that to the state regulators in cahoots with automobile insurance companies. Here’s another example: Life insurance companies will pay out less if someone dies before he is actuarily supposed to. “We counted on another ten years of premiums from you late husband,” they will say. “Sorry. We have to protect our bottom line”. Equally stupid.
Is there a way to avoid this private industry scam? Create a state-wide pool. No ads. No PR, no salesmen. Everyone pays a set amount. Accident? The money comes from the pool. The only caveat” you can’t have five or more accidents within a given time and not expect to pay more into the pool. It can work, and no bureaucrat or politician gets his or her hands on pool money.
Of course this won’t happen in my life-time. Not even if I were only twenty-one.