Where will the money come from to pay the picture takers? The insurnace company? The local municipality that sent the fire truck/ambulance/police (taxes)?

Everyone upto this point has the wrong concept of insurance. It is not betting. It is transfer of risk from the individual/company to an insurance company. In exchange for a premuim, based on the individuals/company’s specific chararcteristics, an insurance company will pay out $xxx.xx on your behalf (liability) to make whole the other person (indimnify). Without insurance, wether social or institutional, the individual/company is solely responsible for making whole/ indimnifying the other party.

Does anyone here have immediate access to $25,000 to pay for a new Honda Accord plus an additoinal $xx,xxx.xx for the other person’s medical bills if you hit and total one tonight going home from work?

Betting/gambling has risk involved but it also has a possibility of reward. We all want to pick the winning horse at the Kentucky Derby, right?

Society pooling money together for the common betterment of the pool has been around for centuries. Today we call it Mutual Funds. Otherwise, trying to socially insure property (auto, home) without fraud is impossible. Someone will have an idea to not play by the rules and screw the rest of the society out of their percieved “fair share”.

Property Insurance has been around since the 1400’s. Mutual Funds have been around since before that. If society/individuals could be trusted to do the right thing, someone would have come up with a better mousetrap by now.

I’m reading a book WWGD (CNG – Polish edition), and I drew attention to the problem of insurance 2.0.

I am afraid that the insurance system based on knowledge (of the total and true knowledge) on the health status of clients, was to be imperfect.
Why?

When insurance is treated as a ‘bet gambling’ it can be compared to the struggle of two boxers.
One of them is a heavyweight boxer, and the other is very light weight. Then you can bet 20:1 that will win a stronger (ie heavier). Thus, in order to win the same amount of money, we should bet on for a more stronger (heavier) competitor for example $ 20, and for a light weight boxer enough to $ 1.

Logical, but are the insurance customers wants to be treated like that?

Imagine that compares two insurance conditions customers:
The first client is healthy and its dna genes are ‘perfect’, and the other is unhealthy and the dna genes shows the risk of diseases such as Parkinson’s.

Both analogy to obtain the same amount of compensation should insure themselves in different amounts, such as 20:1. That is the first pay 20 times less than the second.

However, people who have a genetic basis for the illness, do not disclose it to not pay higher rates. Everybody wants to be treated as a standard healthy man.
If the insurance 2.0 will be controlled too much information , that can lead to a situation where is a ‘discrimination’ group of people with worse example of dna code.
.. And where are the positive aspects of an omniscient insurance agency?
Perhaps only for its own sake – because some people, regardless of their conduct will be condemned at the beginning of the worse conditions of insurance.

The only indication in this situation was that to create the procedure which helped to reduce these differences between customers. So a person with the worst dna should proceed according to a ‘procedure’ of life (formally developed and launched such a procedure was to prevent the unfortunate consequences of the disease).
for example, if a patient with parkinsonism should avoid drugs that weaken the action of dopamine, is that such a procedure is described as a ban (is also a separate question of proving that the client fills these procedures in practice).
Then the insurer with knowledge of the patient could reduce the payment for insurance when the client will live ‘wise’ and ‘healthy’, ie according to the procedures.

Otherwise I see no benefit to customers with insurance 2.0 when the insurer had to know everything about the client, even based on the entire network of web2.0 informers .

ps. sorry for my english

The FLDS and various other Mormon offshoots have been practicing social insurance for ~150 years, almost continuous. Because it is based on rather uncommon religious beliefs, and not venture capitol or online connectedness, I can certainly see how it passed under the radar. But, they have been a largely self-sufficient community, with the care of the elderly and sick provided for by the other members of the group. It may be the largest example of what you are trying to talk about. But, they have a land trust that is now valued at over $100 Million – not exactly small change.

Perhaps not surprisingly, government and religious bigotry have combined to attack the organization. The State of Utah, citing possibilities instead of data, took over the land trust, and has been running it into the ground, losing millions per year. The FLDS are now in court fighting to get it back.

http://www.truthwillprevail.org/index.php?parentid=1&index=173

You (insurance industry) make it hard to understand what you’re talking about, and the distrust level is sooo high — especially since we’re always hearing stories about how people are cheated by their insurance companies.

For me, when you talk about social networking – sharing information in a way that people understand what they’re buying, protecting, or not protecting – what you’re providing is very ’social’ and meaningful. The challenge is that even when insurance professionals are breaking stuff down and think they’re making it easing to understand – often, because insurance is so complex, the information is not as understandable as insurance-folks think it is.

Anyway – I thought your comments were interesting and possibly offer some solutions. But…I must admit, I only undersood about 50% of what I read !!

I’m very late to this discussion, having come here by way of WWGD? which I’m just finishing now.

From my POV as an insurance agent and financial advisor, I personally can provide much better service to my clients the more knowledge they have.

As mentioned above, using Web 2.0 to learn how to self-mitigate risk is a very good idea. Guess where you can start? Industry web pages such as iii.org explain many ways that people can DIY/DIO to lower their risks and, consequently, pay less in insurance premiums.

Here is the most important thing you can do to be a wise consumer of insurance: Read Your Policy! It explains in semi-clear language what is covered and what is not. If you don’t understand, call your agent, then call a rival agent. The rival will do a much better job showing you the gaps in your policy than will the agent who sold it to you.

Another thing that makes your insurance work better: File every claim. You still have the right to refuse the payment, thereby removing the claim from your history. What you get when you file the claim is a free evaluation, aka claims adjustment, of the cost of restoring you to the state you were in before the loss. You can then decide if it is worth paying out of pocket or having the insurance company cover the loss. Also, the sooner you file, the easier it is for the adjuster to give you an accurate evaluation. Again, just because you file does not mean you have to accept the payment.

The III has a great home-inventory tool for collecting your own data about your property so that if you do have a major loss, you can help the adjuster pay the most you are eligible for. Interestingly enough for this discussion, the data can be stored securely in an offsite web location hosted by Amazon.

Above, I’m talking about property and casualty insurance. In a very WWGD? way, for P&C insurance, good information = good results. The more information you have about your own property and the more information you share with your agent, the better she can do in recommending a good policy that will cover what you want covered and ignore what you don’t want.

With your home and auto policies you also get liability insurance. This is what protects your wealth. It is what will cover your assets when/if you do something very stupid and hurt someone or destroy their property. An important component of liability insurance is what is known as “duty to defend.” What this means is that you get the use of the insurance company’s lawyers to protect you from having to pay when you are not legally liable, and from having to pay more than you a liable for when you really are at fault. The limit on this protection is whatever upper limit of liability insurance you have purchased. (Which is why it is important to have liability insurance at least equal to your net worth.) “Duty to defend” is a very WWGD? concept in that it is leveraging the expertise of others for your benefit.

When it comes to disability and life insurance, these are also insurances that protect your family wealth. Disabilty coverage replaces part of your income when you can’t work. It works in conjuction with L&I insurance, but is better because it covers non-work injuries as well. The actuaries have collected mountains of data about what kinds of work activities are more or less likely to lead to injury (and therefore, claims). You can use this information yourself to help you understand what the risks of injury are for you job and mitigate against them.

The data collected in connection with life insurance probably has the most visceral interest to people. Insurance actuaries cannot predict exactly when you’ll die, but they cen make a pretty good guess based on over a century of data regarding gender, age, weight, health, and lifestyle. When the information is inexpensive enough to collect and process, insurance actuaries will look at genetic determinants of longevity, in a “GATTACA” way. You’ll notice I said “will.” If there are laws to the contrary, they will quickly be eroded by the industry and by consumers who realize that an insurance company that can exclude people with certain traits will charge a lower premium to those it does include.

Life insurance is one of the few products where you could potentially get some or all of your premium back if you beat the odds and live beyond the age most people in your peer group achieve. This is entirely dependent on what kind of policy you write – which requires either your direct knowledge of policies and how they work, or for you to leverage the knowledge of an insurance professional to find the policy most suited for you.

Medical “insurance” is primarily group purchase plans for medical care. This is not “insurance” like any other meaning of the word. While people can buy true insurance to cover catastophic medical issues, what most people mean by medical “insurance” is – in the most cyncial sense – a Ponzi scheme where lots of people pay in a little and a few get out a lot.

Reinterpreting medical group buying plans charitably, they are an option for people to pool resources and get bulk rates for medical care, drugs and equipment. In this sense, it should be very easy to use Web 2.0 – information gathering and processing capabilities to help people find the services and goods they need at the prices they are willing to pay.

The two most imporatnat imepdiments to freeing up medical care group buying plans are that they are 1. currently linked to employment and 2. regulated to the point of near collapse.

If medical care group buying plans were de-linked form employment and made more along the lines of credit-union memberships – either by industry (as labor union medical care group buying plans are) or geographic location or being related to someone already in the group, then I personally believe that most of the issues with over-priced, under-paying plans would be cleared up.

The remaining problems stem from the fact that the various States have mandated a long list of treatments that must be covered. As someone noted above, there is an excess expense added to policies that must cover chiropractic, for example, even if only 5% of the subscribers have any interest in it. When subscribers can make a list of the things they want covered and to what extent – as they can do with homeowners and auto insurance – they will have much more freedom and will be able to control the cost of their care more effectively.

However, there is still the problem of negative selection, which has been talked about above, but is a very complex issue that requires more discussion than has appeared on this blog (but is available throughout the web – just start with a Google search).

If anyone is even looking at this page anymore, I’d like to discuss the WWGD? ways insurance can be bought and sold to give more power to the consumer, which actually empowers us agents along the way!

The Insurance 2.0 model with the most opportunity for success today is medical. Not counting major medical, I’m speaking specifically of preventative care. Seeing the number of uninsured flood the ER rooms in hopes of beating strep throat or a sprained ankle, I can see the emergence of an army of “RediClinic” like facilities emerging in the near future.

It occurred to me the other day about what the percentage must be of uninsured/underinsured Americans who participate in healthy lifestyles/Fitness Clubs, working to stay safe – stay fit. Yet, like myself, how many of these uninsured club goers have had a cholesterol or blood screening in the past 6 months? A year perhaps?

Homeowner’s insurance is quite expensive, yet renter’s is easily attainable for most. Why cant preventative care be modeled the same way? Give the 18-35 demographic a simple menu plan of preventative care and common sickness remedies tied to these anywhere clinics where you’re in and out in 30 minutes? Put some facilities in fitness clubs, and give members discounts as to how active they are at staying healthy. Real, tangible results could be viewed immediately not just with your appearance, but your health and risks as well?

There are fitness clubs in shopping malls here in my community, and vision care stores. Why not health care?

Unless you mean pay for people that don’t have insurance.They would be legally complicated.

This is very similar to the way Insurance was originated. Insurances origins are in fact a precursor of social networking.

Toward the end of the seventeenth century, London’s growing importance as a centre for trade increased demand for marine insurance. In the late 1680s, Mr. Edward Lloyd opened a coffee house that became a popular haunt of ship owners, merchants, and ships’ captains, and thereby a reliable source of the latest shipping news. It became the meeting place for parties wishing to insure cargoes and ships, and those willing to underwrite such ventures.Then as now, anyone who was seeking insurance would go to a broker, who would then hawk the risk to the individual risk-takers who gathered in the coffee houses or in the precincts of the Royal Exchange. When a deal was closed, the risk-taker would confirm his agreement to cover the loss in return for a specified premium by writing his name under the terms of the contract; soon these one-man insurance operators came to be known as “underwriters”.

Today, Lloyd’s of London remains the leading market (note that it is not an insurance company) for marine and other specialist types of insurance, but it works rather differently than the more familiar kinds of insurance.

The first one I thought about was car insurance in the UK. However, I quickly realised that an enormous hurdle would be the legal side. If an insured party accidently killed someone in a crash, the insurer would have to pay out millions of pounds. Thus, even if someone were able to invest this sort of cash to insure another person, there return on investment would be such a small percent that it would be pointless to say the least.

I’d love to hear what others thought about this.

Private insurance programs are generally designed with greater emphasis on equity between individual purchasers of coverage, while social insurance programs generally place a greater emphasis on the social adequacy of benefits for all participants.
i.e,Equity versus Adequacy

http://lifeinsuranceworld.org

To the extent that “insurance” is mandated by government on a state by state basis, I think its beyond the hope of help from Web 2.0 technology (just like political game itself).

To the extent that social intelligence may be able to *reduce risk*, I think the Web 2.0 technology may assist in the creation and distribution of “risk avoidance” knowledge. Most technology companies “self insure” (I believe) their employees for long and short term disabilities. They know that the profile of their work force allows them to mostly “avoid” the disability sucker bet.

On a personal level, if I had the knowledge and possession of a fire proof building, I would not need fire insurance. If I found a community that supported a walking life triangle (distance between work, home, and shopping center), I would not need car insurance. If community / alternative / genetic medicine supported average age up to 80, I may give up health insurance. If I knew how to avoid problem X, I would not insure against it.

Apps would help manage the process by identifying the “markets” and helping manage them at very low incremental cost. Could even provide anonymity, so buyer and seller don’t know each other. Could reduce the cost of insurance by helping cut down the need to charge more to the older or more risky because the credits would be used only on an as-needed basis.

I’m late in the discussion, but I wrote a “Seth: think bigger” post about this problem.

It’s related to “people ranking” (as in google’s page ranking), whereas people’s insurance fee will be related to some sort of ranking in their communities. This ranking can then be matched against the (top-down) ranking you get from your insurance agency, offering you a more personalized monthly fee.
See also: http://www.ichoosr.com/blog/archive/peopleranking-what-do-you-think

Do with it what you like.

Cheers

Bart

The first poster, Seth, has a great idea, but if anyone did it they’d wind up in court on about 30 counts.

The ongoing regulatory burden is enormous, too. And then there are the mandatory coverage issues (which really are part of the regulatory burden). For example, you can’t buy health care coverage in NY that does not provide chiropractic or psychiatric coverage.

You’d have to solve all first to make any stab at insurance 2.0 work.

Any investor in the p2p insurance market must also take all their own insurance through that market and no investor can join who is not also willing to use the market to insure their own risks.

It’s then in the interests of everyone involved for the claim validation process to be accurate and scrupulous. If your house burns down, you want your claim upheld; but if another member falsely claims their house has burned down you want their claim defeated.

In theory the response to that will be for all members to claim on day one that their houses have burned down. Get past day one and you’re in a stable situation where everyone is properly incentivised to reward honest behaviour.

Thanks for the link. I took a look at Health Beat and found this (excerpted from http://www.healthbeatblog.org/2008/04/health-care-ref.html):

“The only way to avoid such inequality is to insist that private insurers offer everyone in a given community the same insurance at the same price. Young and old, sick and healthy, everyone pays the same price for the same coverage, and no one can be denied insurance because of pre-existing conditions.”

If such a system is mandatory, it can work–though it is, as I said in my earlier comment, a redistribution of wealth. We take this approach for education (though some people, usually those with more wealth, opt out and choose private schools); we don’t take this approach for housing (though the tax code favors regressively homeowners over renters).

Perhaps personal choice and individual freedom, which comprise the main objections to most national health care initiatives, are overrated. This is a libertarianism vs. socialism debate, and both sides have strong arguments.

In any case, it is certainly possible to take a one-size-fits-all approach. But it certainly doesn’t sound very “Web 2.0″–which is where I thought this discussion started.

1) The customers are the *owners*. We hold the stock. We get the dividends. We vote for the board of directors. Profits flow back to us. This is an important difference.

2) These are situations where the customer chooses the vendor. Healthcare is different. With a few exceptions, the healthcare insurance buyer is a corporate or government bureaucrat. It is very rare that the patient has any choice in the insurance vendor or insurance coverage. The mutual insurance and banking have been in areas where the customer is the person insured.

Both of these make a huge difference in the motivations of the insurance staff, attitudes of both staff and customers, and the correspondence between customer expectations and insurance coverage.