Comment on Insurance cost of Los Angeles wildfires may be felt in Australia
NaevaTheRat@vegantheoryclub.org 1 week ago
Leaving insurance privatised is insane to me. The whole of society hurts if people can’t rebuild their lives and we just let people screw people for as much as they can then drop them the moment is looks like turnabout might be coming. Ok.
Salvo@aussie.zone 1 week ago
Nationalisation probably isn’t the option for Insurance. Regulation would be a better option.
Nationalisation of Utilities, like Water, Power, Telco, Rail, Roads, etc does make sense, but Insurance, Banking, Media needs to be private (although government-funded competitors are great at keeping the industries honest).
We have the Transport Accident Commission in Victoria that covers medical for Car accidents, but will seek remuneration from Private Insurance company’s as necessary. They also make very disturbing and visceral traffic safety ads.
NaevaTheRat@vegantheoryclub.org 1 week ago
Why? That’s just an assertion. Mathematically I only offer you insurance if it is, on average, a bad deal for you. It’s just a casino for houses, the house always wins.
Private businesses aren’t charities, but everyone suffers if houses cannot be rebuilt, or people cannot replace the tools they need to flourish after a car accident or break in etc. We all bear the cost of this anyway since we all have to be insured which is (cost of covering this damage + profit). It is effectively a regressive tax for a scheme which doesn’t cover everyone equally.
When people aren’t covered it’s a disaster for everyone and it’s cruel to leave people in the lurch. The government sets the social conditions (property crime, availability of welfare etc), the environmental conditions (natural disasters, harms from pollution etc), and releases land to build on (risk profile). Community bodies such as government are the only bodies that make sense to run insurance for, and it motivates us not to e.g. release land that’ll flood and just say “lol sorry you poors who had to live there because we won’t densify”.
Please make your argument for privatisation.
Salvo@aussie.zone 1 week ago
If there is already a nationalised system than works, that is fantastic, it shouldn’t be privatised.
Private businesses aren’t charities, but there are benefits that a legitimately free market (not a monopoly, duopoly or cartel) can provide customers. Competition can result in dynamic improvements in value and also in service quality. A nationalised company with no competition can stagnate and be just as destructive as a commercial monopoly.
NaevaTheRat@vegantheoryclub.org 1 week ago
This is the propaganda put forward sure, but this argument works just as well for privatising medical insurance (Medicare is just an insurance program), roads, rail, telephony, building regulation etc. We know how those turn out.
It’s not fundamentally addressing the problem that insurance is not something you can innovate in. Something like a house costs X to rebuild, that’s somewhat flexible but at the construction level not the insurance level (unless you’re proposing vertically integrated insurance and construction?). The chance of a house being destroyed is Y per month, you charge Z such that Z - operations > Y x X
There are complicated methods of spreading the risk across multiple suburbs and such so your capital reserve isn’t anhilated in one fire but everyone must be insured so across an industry there is no efficiency to find there and the only other way to improve yield is finding ways to deny claims which just pushes the costs onto society so that is not something a government should try to encourage.
If it is not nationalised then either high risk suburbs are not insured, the government subsidises insurance in high risk suburbs which is just silly, or the government insures high risk suburbs. If the latter this is worse as private industry gobbles up the profitable suburbs and we all foot the bill for the rest.