I think a member here has found a great idea for dealing with insurance...

Okay so I want to give full credit to the poster mkkkay, here is the comment I hope he/she doesn't mind...

here is a way [to deal with insurance], you get about 1000 peoples to put 100$ a month for 1 year. then you have 1million dollars in a bank account. then you go and see a notary and have the account put up has collateral in case of a claim. then you never pay insurrance again... until one of the thousen people in the group as an accident... then 1000 people pay for the demages.. the damages never really go for more then 100,000$ witch means a one time amount of 100$.

So I was in a thread regarding driving without a licence, insurance, mot etc and I saw this comment and thought it could really do with exploring a little more within it's own thread.

This idea could really be feasible in my opinion and it should be really easy to sell to people. So I thought of an added clause. You instigate a 3 strikes and you're out system. Say someone crashes and it costs 1000 to repair, everyone chips in £1. Now the person that crashed has one strike marked off so 2 remaining. And I thought well how about giving the person the opportunity to buy the life back? All they would have to do is pay the 1000 back and it can be at their leisure. It makes no odds to anyone else. If and when they do buy back their life everyone can be refunded their £1.

Not too complicated I hope? lol

Now who would run all of this? How would they get paid? Well for 1000 people I can't see you needing a huge workforce to run this, right? And I thought perhaps the interest from the million being held could cover this cost?

I really thing this idea is beautiful and I just don't see why it couldn't work. There could even be incentive for you to set up more groups if you can manage to eek out a living from the interest. Presumably the more groups you had the more cost efficient it would be for the operator.

Right so if you could get a 4% interest rate that would get the operator £40,742. Now how many claims would you expect coming through a week from a thousand drivers. I shouldn't imagine it would be very high, I think a 1 or possibly 2 man job. Then imagine if you had 2 groups of 1000 people?

Is anyone still following this?

I think fraudulent claims would be very low in this kind of scenario too just because you wouldn't want to lose your strikes.

So yeah, please feel free to have a tweak and give your opinions and possibly fill in some of the blanks. Or tell me why it couldn't work.


Edit: After talking with a friend on the phone about this he raised a good point about the price of the car. So I was thinking you could have a cap of say no higher than £30,000. Then I thought an even better way would be to group people into price brackets (this would be when you are a massive mega corporation lol). That way if your car is worth a grand so will everyone else's in your group of 1000.

$100 a month is way more than i pay on insurance now...


and essentially, he has described exactly what an insurance company does...

so how is it any different? who will decide how that money is allocated in an accident? what if i dont want to pay cos jane blogs was huffing paint before she crashed??

its not really a soultion...its a less organised/regulated version of insurance, that costs more and provides less..

reply to post by okamitengu

$100 a month is way more than i pay on insurance now...

For one year only? This is the plan under this system. Perhaps I could of made that clearer? After you have paid the initial years fees all you would pay is your portion of a future crash. Say someone in the group did a £1000 damage you would have to pay £1.

and essentially, he has described exactly what an insurance company does...

It is nothing like how insurance is now...

so how is it any different? who will decide how that money is allocated in an accident? what if i dont want to pay cos jane blogs was huffing paint before she crashed??

Already explained the first bit. Who will decide? Maybe you? Start up a business with this model. That is another clause, you would receive a letter that a payment is due and then you would have an allotted time to pay and then a warning system if you did not pay and then final you would be removed from the pool.

its not really a soultion...its a less organised/regulated version of insurance, that costs more and provides less..

This is so funny! Hopefully now you see why?

reply to post by mee30


I would say making everyone pay a percentage of their cars value would be a better way, so you wouldn't have to have a bunch of different catagorized groups, but instead, my rust bucket car valued at $1000 would cost me $100 total, but a $100,000 would cost you $10,000 to insure, this would be better than making everyone else pay for someones rediculous lambo, and most people wouldn't even need insurance at all to replace. Cheapo rust bucket.

I wil have to think more about this before I comment further.

You forgot to include lawyers and lawsuits.

They will suck you dry.

That's exactly how insurance works today, but you're never going to get to a point where you won't have to pay in. Indeed, the more people you have in your pool, the more statistically likely it is that you will have claims every year. Insurance companies take your premiums, pay their employees, invest the money for as long as they can, pay out claims, and hope to make a profit. I know it's popular to criticize any business, but if you worked as a claims adjuster for an insurance company, you'd probably want a salary, and full benefits.

In my state we formed a consortium just as suggested by the OP. It was a non-profit group called the Washington State Governmental Insurance Pool. A lot of "goverment" entities like Fire departments, counties, cities, libraries, port districts, park districts, etc. joined the pool and paid premiums. The idea was exactly like OPs. We were being faced with higher and higher premiums from for-profit companies, so we decided to "be our own insurance" company without need for a profit. Our overhead (employees) was extremely low. The pool covered health care, liability, property, the whole nine yards. Over the years we saved tens of thousands of dollars a year compared to "normal" insurance companies, and then we

went bankrupt. In the end we had to fork over an extra $30K to the pool to help it pay off its debts. What happened? Beats me. I wasn't directly involved, but the point is that it's harder than it looks.

reply to post by inverslyproportional

I would say making everyone pay a percentage of their cars value would be a better way, so you wouldn't have to have a bunch of different catagorized groups, but instead, my rust bucket car valued at $1000 would cost me $100 total, but a $100,000 would cost you $10,000 to insure, this would be better than making everyone else pay for someones rediculous lambo, and most people wouldn't even need insurance at all to replace. Cheapo rust bucket. I wil have to think more about this before I comment further.

Like I said there would be no lambos (to begin with) you would have a limit on the price of the car. You could set that to whatever your heart desired. And then branch out eventually to more expensive motors.

I don't get the pricing examples? Everyone would pay 100 a month for 1 year only. After that you would only pay when someone has a crash.

I'm glad it has gained your interest and I look forward to your future input. I'm honestly REALLY excited about this! I wanna set up business TODAY! lol

reply to post by kdog1982

You forgot to include lawyers and lawsuits. They will suck you dry.

Why? You can most certainly work these things into the pricing. And eventually the guilty party would pay for these things. It is a minor matter to be honest.

Originally posted by mee30
reply to post by inverslyproportional

 

I don't get the pricing examples? Everyone would pay 100 a month for 1 year only. After that you would only pay when someone has a crash.

That's what you don't get. There will be crashes every year. It is statistically inevitable.

reply to post by schuyler

That's exactly how insurance works today, but you're never going to get to a point where you won't have to pay in. Indeed, the more people you have in your pool, the more statistically likely it is that you will have claims every year. Insurance companies take your premiums, pay their employees, invest the money for as long as they can, pay out claims, and hope to make a profit. I know it's popular to criticize any business, but if you worked as a claims adjuster for an insurance company, you'd probably want a salary, and full benefits.

Wow so today you pay for £100 for 1 year ONLY then after that just pay when there is an accident? I am struggling to see how people say it is the same.

The pool size can be set to whatever you want as can the initial 1 year payment. That is up to you.

Salaries and expenses will be paid by the interest.

In my state we formed a consortium just as suggested by the OP. It was a non-profit group called the Washington State Governmental Insurance Pool. A lot of "goverment" entities like Fire departments, counties, cities, libraries, port districts, park districts, etc. joined the pool and paid premiums. The idea was exactly like OPs. We were being faced with higher and higher premiums from for-profit companies, so we decided to "be our own insurance" company without need for a profit. Our overhead (employees) was extremely low. The pool covered health care, liability, property, the whole nine yards. Over the years we saved tens of thousands of dollars a year compared to "normal" insurance companies, and then we

went bankrupt. In the end we had to fork over an extra $30K to the pool to help it pay off its debts. What happened? Beats me. I wasn't directly involved, but the point is that it's harder than it looks.

See you do get it but to begin with say it is what we have now when clearly it is not... So it worked for a time and then something happened. Perhaps people at the top got greedy?

Nothing in life is easy, but I know that it can work and as you said it saved a lot of money! It is hard to say anything about the outcome as you don't know what happened behind the scenes.

Insurance companies can go broke too.

Originally posted by mee30
Okay so I want to give full credit to the poster mkkkay, here is the comment I hope he/she doesn't mind...

here is a way [to deal with insurance], you get about 1000 peoples to put 100$ a month for 1 year. then you have 1million dollars in a bank account. then you go and see a notary and have the account put up has collateral in case of a claim. then you never pay insurrance again... until one of the thousen people in the group as an accident... then 1000 people pay for the demages.. the damages never really go for more then 100,000$ witch means a one time amount of 100$.

This idea could really be feasible in my opinion and it should be really easy to sell to people. So I thought of an added clause. You instigate a 3 strikes and you're out system. Say someone crashes and it costs 1000 to repair, everyone chips in £1. Now the person that crashed has one strike marked off so 2 remaining. And I thought well how about giving the person the opportunity to buy the life back? All they would have to do is pay the 1000 back and it can be at their leisure. It makes no odds to anyone else. If and when they do buy back their life everyone can be refunded their £1.

Not too complicated I hope? lol



I really thing this idea is beautiful and I just don't see why it couldn't work. There could even be incentive for you to set up more groups if you can manage to eek out a living from the interest. Presumably the more groups you had the more cost efficient it would be for the operator.





I think fraudulent claims would be very low in this kind of scenario too just because you wouldn't want to lose your strikes.

So yeah, please feel free to have a tweak and give your opinions and possibly fill in some of the blanks. Or tell me why it couldn't work.

edit on 9-10-2012 by mee30 because: (no reason given)

What if the crasher, and the crashed were scammers and adding personal injury. And what if a crasher is really an innocent party in all three strikes, but loses all three court cases, the figures of which, might be way out of estimate. That's the way the law works, third party claim is mandatory and could be any figure, vehicle crash repair is expensive even to the point that some insurers nowadays might insist on second hand parts be used in the repairs. Your million dollars is mere petty cash in that scenario.

reply to post by schuyler

That's what you don't get. There will be crashes every year. It is statistically inevitable.

Aye? Crashes every year? I'm looking at crashes every WEEK! I said that in the OP. I do get it and that is not a problem. You just need to read the op again to see why.

reply to post by smurfy

What if the crasher, and the crashed were scammers and adding personal injury. And what if a crasher is really an innocent party in all three strikes, but loses all three court cases, the figures of which, might be way out of estimate. That's the way the law works, third party claim is mandatory and could be any figure, vehicle crash repair is expensive even to the point that some insurers nowadays might insist on second hand parts be used in the repairs. Your million dollars is mere petty cash in that scenario.

The amount you have in the pot is variable and up to you. The figure is purely an example. Scammers will be quickly weeded out by the 3 strike system, plus why would people want to lose this deal? Also to start with you could keep the cap on the car price pretty low and go from there.

The costs spread over a 1000 people is no big deal. Even if the cost of one crash was £100,000 it would only cost each person a one off £100 payment, which they could well get back if the crasher wants their strike back.

that's exactly what an insurance company does.

but they also use that money to invest in the stock market and other ventures.

it's when they lose money on their investments that they start to increase your deductibles and premiums.

then they have to turn a profit.

then when they see all this cash piling up, because they are collecting 100x more than they are paying out, greed starts to creep in.

and before you know it, you're paying $3500 a year for insurance with $10,000 deductibles.

OP, you need a reality check. An insurance claim for a broken arm is 20,000 pounds. Let's say a flood goes through the neighborhood, damages 50 of the insured homes. Insurance works because the companies are huge. Little groups like your suggesting would end the moment a freak storm did some damage.

P

reply to post by schuyler


Let me explain a little more. So say all 1000 people have now paid in and we are good to go. After that you pay nothing. Say a week later someone causes £1000 in damages. Everyone is notified to make a payment of £1 by such and such a time (within a month maybe?). The damages are paid out of the pot and then replenished by the 1000. Okay so that person now has a strike (you could even have a 2 strike system instead of a 3? It is all variable.) It would be a good idea for them to get that back by paying back the £1000. They can do this over time even £1 a week, whatever, it would be on them. When the £1000 is returned everyone gets there £1 back.

I really don't see there being THAT many claims from only 1000 people.

That any clearer?

I see you must be over the pond from the US.

I see multiple crashes everyday.And most of the time it involves injury or even death.
Medical bills,compensation for loss of income and so on.

Average cost of a fatality because of a car crash here in the US is about $6 million dollars.

usatoday30.usatoday.com...

Originally posted by mee30
reply to post by schuyler

 

That's what you don't get. There will be crashes every year. It is statistically inevitable.

Aye? Crashes every year? I'm looking at crashes every WEEK! I said that in the OP. I do get it and that is not a problem. You just need to read the op again to see why.

You're not understanding the basics of insurance. You are seeing it in a philosophical perspective. If people could do what you want them to do they would have already done it. You are being belligernt about your lack of knowledge as well. We are trying to tell you how the real world works and you're there fighting for your idea rather than trying to learn and absorb what some of the issues are. I won't bother trying to educate you any more on this topic because you think you've got it down.

So go try it and report back. I predict you will have your tail between your legs.

reply to post by mee30


What happens when one of the insured's is at fault and crashes into a 100,000 dollar Mercedes being driven by a neurosurgeon, who because of the accident can no longer work due to nerve problems?
He and his insurance company (you can bet your life on this) are going to come after the at fault driver and this insurance group that you have set up.
Lawyer fees alone could empty your million dollar coffer, not to mention any settlement made or any award the jury finds.

If it were this easy, this setup would already be in use.

Keep in mind that not all insurance companies make money. They dont all have A+ ratings. There is a reason for this.

reply to post by randomname

that's exactly what an insurance company does.

Why are so many saying this? GRRRRRR

I have never heard of an insurance company that you pay into for 1 year only then only pay a portion WHEN there is a crash!

I know insurance companies invest money for crying out loud! That is not the point here. Please read it again and the other comments. This could really work.

Oh and a meager £20,000 between 1000 people is nothing. £20 each. Which would eventually be paid back by the guilty party.