Insurance is a risk management tool. The risk of loss is assumed by an organization (the insurer) which has many units, only a small number of which will have a loss.

An insurance company insures 1,000 houses at $600 each ($600,000) knowing that only 10 will have fires that average $50,000 ($500,000).

Starting in 1688, Lloyd’s of London organized risk sharing by allowing for risks to be spread amoungst many different syndicates. Each syndicate had a risk expert who would accept a share of the risk by signing a document outlining the risk – he wrote his name under the description of the risk – he was an “underwriter.” (BTW, that’s Lloyd’s in the pic above)

Google could provide the same syndication system on a worldwide basis using its ability to organize and integrate data with those who can use the data to make decisions.[...]

Presumably insurance could, in theory, operate in a similarly Googly way.

We are so over-insured these days, mostly out of fear. Fear of someone else not paying attention, or our own self-developed bad habits (e.g. smoking, eating poor choices, sitting on the couch, etc.) If we take better care of ourselves, would insurance be AS necessary? Instead of trying to figure out how to get insurance companies to pay everything for everyone, how about getting everyone to try to be LESS expensive. With the proliferation of knowledge (and Google) self-diagnosis should be pretty easy for common ailments. How about only using the ER for true emergencies (like broken limbs or flowing blood), or driving safer, slower and smarter (e.g. stay off the phone, etc.).

Imagine if insurance companies didn’t have claims to pay, lawsuits to settle, or fraudulent bills to investigate, wouldn’t there be more money around to pay the real bills? I’m not saying that insurance companies are detached from all of this, but if we as a community, as a country take more responsibility over our actions, wouldn’t the need for so much insurance decline? Just a thought.