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I don't know what the story is in Malaysia, but where I live any huge payouts by insurance companies ultimately get borne by the consumer (almost equivalent to

I don't know what the story is in Malaysia, but where I live any huge payouts by insurance companies ultimately get borne by the consumer (almost equivalent to taxpayer) in the form of increased premiums and levies. It's not tax for sure, but it is effectively an additional set of charges that many people have to pay.

woah 11y ago
Well that is the purpose of insurance.
- ricksplat 11y ago
  I didn't say it was unfair - I was saying that everybody ends up paying for it in the end, even if it's not through direct taxation.
  - mikeash 11y ago
    In a case like this, it's not everybody, but airline customers, and in rough proportion to how much they fly. Which is a decent way to distribute the costs.
    - ricksplat 11y ago
      > it's not everybody, but airline customers I'm afraid that's just not true. That is certainly the principal, but in reality (in Europe at least) the costs are distributed across the entire consumer-base. The costs are "socialised".
      - mikeash 11y ago
        I'm not sure I understand. Are you saying that if, for example, airline-related insurance claims increase, the insurance companies will raise their rates for all types of insurance, not just airline-related insurance?
        ricksplat 11y ago
        So costs get socialised in three ways I can think of; firstly the direct increase in insurance charges to those who avail of flight insurance (this is the case which you mentioned) - but it doesn't stop there - this increases the "cost of business" and these costs are passed on. By the time these increased costs reach individuals the effect is negligible but it does affect the broader (Malaysian) economy. The second is through insurance companies increasing charges across the board. Insurance is a marketplace just like any other and in order to stay competitive in one market costs can be spread to another. The final is direct regulatory intervention where the wider customer base is directly charged a percentage (google "insurance levies"). So I opened with "I don't know what the story is in Malaysia but .." because the relative influence of each of these factors is profoundly regional, related to regulatory and government policy . But now that I think of it, even in a libertarian paradise the effect of the second one alone would be fairly significant.
        mikeash 11y ago
        I'm not talking about individuals buying flight insurance, but airliners insuring their planes. All airline customers indirectly pay for that. I don't understand why or how an insurance company would raise rates in one area because of increased costs in a different area. If the costs in the first area haven't gone up, but they still raise rates, then they'll just be undercut by other insurance companies who don't raise rates, and lose business. And if they don't raise rates in the area where costs have gone up, then they'll lose money on it. When I search for "insurance levies" all I can find are taxes on insurance premiums.
        ricksplat 11y ago
        Insurance levies aren't taxes because the state doesn't collect them. But their purpose is to subsidise the insurance industry.
  - deleted 11y ago
    [deleted]

woah 11y ago

Well that is the purpose of insurance.

ricksplat 11y ago
I didn't say it was unfair - I was saying that everybody ends up paying for it in the end, even if it's not through direct taxation.
- mikeash 11y ago
  In a case like this, it's not everybody, but airline customers, and in rough proportion to how much they fly. Which is a decent way to distribute the costs.
  - ricksplat 11y ago
    > it's not everybody, but airline customers I'm afraid that's just not true. That is certainly the principal, but in reality (in Europe at least) the costs are distributed across the entire consumer-base. The costs are "socialised".
    - mikeash 11y ago
      I'm not sure I understand. Are you saying that if, for example, airline-related insurance claims increase, the insurance companies will raise their rates for all types of insurance, not just airline-related insurance?
      - ricksplat 11y ago
        So costs get socialised in three ways I can think of; firstly the direct increase in insurance charges to those who avail of flight insurance (this is the case which you mentioned) - but it doesn't stop there - this increases the "cost of business" and these costs are passed on. By the time these increased costs reach individuals the effect is negligible but it does affect the broader (Malaysian) economy. The second is through insurance companies increasing charges across the board. Insurance is a marketplace just like any other and in order to stay competitive in one market costs can be spread to another. The final is direct regulatory intervention where the wider customer base is directly charged a percentage (google "insurance levies"). So I opened with "I don't know what the story is in Malaysia but .." because the relative influence of each of these factors is profoundly regional, related to regulatory and government policy . But now that I think of it, even in a libertarian paradise the effect of the second one alone would be fairly significant.
        mikeash 11y ago
        I'm not talking about individuals buying flight insurance, but airliners insuring their planes. All airline customers indirectly pay for that. I don't understand why or how an insurance company would raise rates in one area because of increased costs in a different area. If the costs in the first area haven't gone up, but they still raise rates, then they'll just be undercut by other insurance companies who don't raise rates, and lose business. And if they don't raise rates in the area where costs have gone up, then they'll lose money on it. When I search for "insurance levies" all I can find are taxes on insurance premiums.
        ricksplat 11y ago
        Insurance levies aren't taxes because the state doesn't collect them. But their purpose is to subsidise the insurance industry.
- deleted 11y ago
  [deleted]