Wednesday, 20 April 2011

Disaster Insurance

Insurance, in order to remain a viable business, needs to be profitable for insurers in the long run. Someone is paying for any insurance bonus one gets, just like with poker machines that have a set margin of return. If someone wins big, it means that multiple people have lost - and that excludes the margin the poker machine companies take out.

In terms of a disaster fund for Australia, I can't see why insurance is a better option than ensuring enough money is put aside. Perhaps it's for the short-term access to funds, but in the long run I can't see how insurance is a good idea. It seems inevitable that we're going to be paying more than what it would cost just to take care of it ourselves, otherwise who is paying for it?

No comments: