The Home-Insurance Coin Flip: Nearly Half of Claims Result in Zero Payout

[2na fisherman]

26. Catastrophic Losses Backstopped By Government

Insurance companies usually get reinsurance to fund catastrophic claims on them. But even those reinsurance companies can be protected from losses by government bailouts as the ultimate insurer of last resort. So if a large disaster like a mass terrorism event or a huge flood happens, they can have some of their losses covered by the taxpayers. Nice business model. So why not create some blanket government insurance for people directly and eliminate these profiteering middlemen? Oh, I forgot, the insurance industry lobbyists give huge donations to the politicians not to do that. Insurance is a racket but we seem to be forced to buy something we may never need but also may not cover what we thought it should.