Insurance Savings Accounts?

By Eric Peters, Automotive Columnist

Let’s accept — for a moment — the core argument that’s typically trotted out in support of forcing people to buy car insurance: You might hurt someone or cause damage to someone else’s property; if you don’t have insurance, these costs will be borne by society.”

Therefore, “society” has a right to demand that you carry insurance.

Well, ok.

But our dollars don’t go into a general slush fund, held in trust, to be used to pay for various mishaps that occur (if and when they actually do occur).

Instead, our dollars are taken from us for profit.

For the financial benefit of private businesses that use government force to compel us to “stand and deliver.”

These businesses pay out the occasional claim, it’s true. But they fight it tooth and nail; liability is limited (read your policy if you don’t believe me) while their profit margin isn’t. The truth is only a small percentage of the funds we’re all forced to hand over ever go to pay for crashes and injuries to people and property. The lion’s share goes to shareholders, to pay for big glassy buildings and executive suites and well-coifed lawns, the six-figure (probably seven) salaries of corporate officers; the millions paid out to thousands of employees.

“Society” gets pennies on the dollar.

Why not cut out the middle man?

You have probably heard of health savings accounts (HSAs). These were popular, pre-Obamacare. The idea was, you put money aside, into the HSA, where interest/investment income accrues. If you need to use the money to pay for medical treatment, it’s gone. But if not, it’s available for other things. It does not disappear into the ether of What If? — as your insurance premium dollars do.

Under the current system, your money is gone the moment you sign the check or authorize the debit. Even if you never actually have an accident, never impose a penny in costs on “society.” There is something very wrong about this. You’re being made to pay for nothing.

It doesn’t get more wrong than that.

Think about it. Let’s say you pay out $500 annually for a policy. For the next 30 years. During that time, you manage to avoid so much as dinging anyone else’s doors. You’ve transferred no costs onto anyone else’s lap. Yet you are punished for your prudence. To the tune of $15,000 — not counting the “opportunity cost” of the money you no longer have. What might that $15k have become via the miracle of compounded interest?

What investments might you have made?

Speaking of investments — and incentives: If “safety” is what’s desired, as we’re constantly told; if the object of this exercise is, in fact, to reduce the costs to “society” that result from accidents — wouldn’t it help if people knew there’d be a financial reward for not causing an accident?

As opposed to being punished even if they never have one?

Is it unreasonable to suggest that people would probably be more careful about their driving if they knew that for each year they managed to avoid bending a fender, there’d be that much more money in the bank?

Their bank?

Instead, the incentive is to be less careful.

After all, they’re going to take your money regardless. And to a very great extent, they take it for reasons having nothing at all to do with any costs imposed on “society” — the ultimate kick in the teeth. They’ll up your premiums based on demographic generalities; sex and age and marital status. They’ll use the excuse of traffic tickets which they know perfectly well are just that — an excuse to dun you. (It’s a fact that “speeders” tend be safer drivers, if the metric is who is more likely to cause an accident.)

Insurance Savings Account (ISAs) would be a step in the right direction. Or at least, they’d call a halt to the savage fleecing of the driving population by the insurance mafia. These greasers make you an offer you’re not allowed to refuse. And profit from it. Why there’s not more outrage, I have no idea. Brainwashing and political language has a lot to do with it. People compartmentalize. They watch The Godfather and recognize immediately that Don Corleone is a thug. But they see a TV ad with a friendly-looking Flo conversing with a cartoon lizard and don’t make the same connection. Even though it’s actually worse. Because the mafia is after all illegal — whereas the insurance mafia can legally make you an offer you can’t refuse.

Ideally, people would be free to choose to have — or not have — insurance. And be held accountable — and not. Most of all, in a free society, people would not be punished before they cause any harm. But since America is no longer a free society, perhaps the best we can hope for is that people not be punished for profit.

ISAs would do that, at least.


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