INSURING THEM — NOT YOU
A Phil Ackman Article
The original insurance model — a great two way proposition. Spread the risk across every ship in the fleet. Pay out if a clipper goes to the bottom. Keep a modest surplus for themselves.
But #insurance — like all business — now after the largest, juiciest profit they can get. East coast Australia — and Far North Queensland’s endless “weather events” — a perfect crucible for the crash dummy suckers — that’s us — who pay the ever spiraling premiums and imagine we’re secured.
But not all plain sailing for insurers either. An early lesson when they learned they could crank up premiums only so far — before we choked on the cost — and returned to our now fully uninsured homes.
The first cunning breakthrough — an ever expanding list of exclusions — artfully buried in the middle of hectares of fine print. Which no one noticed, of course. Or read.
Until the insurer triumphantly rejected your claim. Fully covered if an antelope fell on your house. Otherwise — no cigar. Which might help explain why cheap insurers are — well — cheap. The #exclusions — what they won’t pay out on — are still there of course — but often now sprinkled through your entire 50, 60, 80 page home owner policy. Little nuggets of financial rat poison in a container load of microscopic type.
The elusive destination of this largely covert journey? Collect the largest possible premium — and never pay a penny out.
Forever out of reach, of course, because never paying might eventually lead to bad press. Questions in the House. Even the attention of the regulator. This could mean your insurer’s roof falling in —instead of yours.
Each new cyclone, bushfire, or flood, however, a test tube that brings them a step closer to this promised land of boundless profit.
One increasingly explored option — insure only those they are confident will never make a claim. A particularly popular strategy in parts of Cairns, the tropical Qld coast, Lismore and other locations, where the cost of including flood insurance, for example, can cost $30,000 a year, or more. In 18th Century terms — only insure the unsinkable ships.
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Given the inevitably of some claims, however — and the disappointing truth not every event can be excluded —insurers have now arrived at an even more Machiavellian plan. When they visit the half-standing ruins of your former home, their job now contains three profit-bloating goals:
There is real incentive to low-ball the payout. After all, they’re the ones writing the cheque. A real life example: Insurer damage assessment? $130,000. And now the good bit. The money has thudded into your bank account. Fast — because speed is all about them — not you. A headlong rush to settle before your own real life quote on the cost of repairs.
Not the $130,000 they paid you — in full and final settlement. But $200,000. Or three. The inspired king hit? No second bite of the cherry for you. Without understanding what that meant, you took the cash.
Finally, the latest salvo in this unceasing battle against the trusting. Pinhole leak in the roof? Rusty gutter? A window that doesn’t perfectly seal? Could these have contributed to the damage?
The answer — of course! Your negligence worsened the loss — which they now subtract from the settlement you hoped to get.
As an aside, one insurer has just launched an app to “simplify your home maintenance routine.” Perhaps this is truly helpful. Perhaps, on the other hand, the app also reports back to them. Who’s to know?
All of this will likely soon lead to an annual home-worthiness inspection. A long list of plumbing, electrical, roofing, and other expensive tasks before you can be comfortable you really are insured.
Eventually the penny might drop. The best outcome of that flood, cyclone or bushfire? The family home reduced to rubble! No way to nitpick that claim. Until insurers decide to exclude total loss — perhaps the next step on their path to insuring them — not you.
I’m #philackman and this #philackmanarticle first to air on #cairnsfm891