welsch@houxu.UUCP (Larry Welsch) (06/03/84)
The method insurance companies use to set rates discriminates against people who insurance companies consider likely to collect on their policies. Men pay higher life insurance and lower retirement insurance than women, because insurance companies are more likely to pay out more on life insurance policies on men and retirement policies women because women tend to live longer than men. This has nothing to do with social policy or fairness. Are the actuarial tables used by insurance companies fair? I don't know. Most companies only care that the tables are set up in such a way that they attract enough business that they make a profit. That is the only measure of fairness for the company. Whether or not the table represents reality or is fair doesn't really matter. For example say insurance company A groups all automobile drivers in nations into one table to base its rates on and insurance company B divides drivers into states and insurance company C divides drivers into age categories. Which company is fairer, A, B or C. Does the state one lives in make a difference in an individual's driving ability? Hell no! But, it may have a lot to do with whether or not one is likely to have an accident. What about sex or color, probably the same thing holds. It would appear to me that the only fair thing to do is not to allow insurance companies to discriminate at all, ie. in order to sell insurance a company must sell insurance to everyone and the rates must be identical and based strictly on a company's losses. We can now move quickly to universal insurance with one insurance company that works as follows, 1. A person may buy whatever insurance (s)he may want in whatever quantity. For example say $10 million personal liability. 2. To purchase insurance people only pay an administrative overhead so that the company is guaranteed a profit. 3. Whenever a person has a claim against her/his policy, then all people who hold similar policies pay the claim in proportion to the amount they are insured. Larry Welsch houxu!welsch