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In this [1] interview by Barry Ritholtz, Markel CEO essentially told the origin story of an insurance giant. Basically a family member was a lawmaker, passed a

• throwawaygh 5y ago
  > It blew my mind at how candid he was about the fact that his business exists due to regulatory mandates. This is extraordinarily well understood in the insurance industry. They don't think of it as odd or a dirty secret, at all. It's more surprising that he was so open about the naked corruption/nepotism in the origin story. Apparently there's a sector of society for whom that is also normal and acceptable. > I feel like I’m self insuring when it comes to car and healthcare at least. This is not at all the case for car insurance! You may be self-insuring the cost of your car, but are you also self-insuring against a lawsuit for damage to the other guy's car? It's definitely more true than not for healthcare, though. Health insurance is a pretty terrible product.
  • NikolaNovak 5y ago
    Agreed; but I don't see it as necessarily nefarious (only probably nefarious:) In a lot of places, most people only wear seatbelt, wear a helmet, don't drink and drive, etc due to laws/regulations (and in others, they'll strongly actively fight these initiatives). We are really really REALLY bad, on average, assessing personal risks. Regulation, in part at least, is us as a society taking look at overall percentages and saying "well let's not do that". There's a likely apocryphal story about sysadmin who was fired after event he estimated had less than 10% chance of happening, happened. Most of us assume that <50% means it won't happen, >50% means it will happen. With most events that insurance covers, most of us are aaaaawful at understanding it can ever happen to us... and we most definitely over-estimate the gracefulness, self-awareness and ownership we'll exhibit if it does help us.
  • duckmysick 5y ago
    > Health insurance is a pretty terrible product. What's the alternative?
    • hermannj314 5y ago
      Health insurance is a terrible product because it is usually not insurance at all. If you are an alcoholic with a history of OWI/DUIs and you have a pre-existing car accident and no job, no one expects you to get free car insurance paid for by the government that will fix your already damaged car and make sure you can drive again as a human right. In Healthcare, we assume that product should exist and we demand that it be called insurance for some reason. The alternative to health insurance is free Healthcare. It isn't insurance at all.
      • duckmysick 5y ago
        I believe you're arguing semantics. If we're being strict about the definition of insurance, we should also be strict about "free healthcare". There's no such thing. Somebody has to pay for it. If it's the government, they do so using money collected from their citizens. You can call it premium, tax, payment - it doesn't matter. At its core it's a system of distributing risk - which is insurance. In my mind, the alternative to health insurance is paying market rates out of your pocket for everything. It's not a good idea and that's why most of the countries have universal health insurance coverage.
    • aspenmayer 5y ago
      A single payer system? Or a hybrid system with Medicare for all with income limits, above which you must either get third party insurance or pay a small tax is how it was done in Australia last time I was there. It seemed to work well when I was there, and I did have need of it. I had to go to the ER when I was peeing blood after being kicked by a horse directly in the kidney. Fortunately there were no blood clots and it passed after a day or two, but they had to do tests to verify it all and also an MRI I believe. I never got a bill. I had more medical expenses from mandatory screening fees for visa applications there than from a potentially life threatening medical emergency. And it was included in my yearly taxes with no fees at the point of usage for anything I can remember offhand. Meds were cheap because the whole country’s Medicare board bargains with the pharmaceutical companies directly, and if your meds are too expensive, they will just go with a competitor and leave that vendor out of the Medicare coverage schedule. This is not unequivocally a good thing, but those meds are still available on the market, but you will pay more for them unless you have third party coverage. Generics are also available just like most places. Not sure if it’s changed since, as that was like 15 years ago.
  • d136o 5y ago
    > It's more surprising that he was so open about the naked corruption/nepotism in the origin story. Apparently there's a sector of society for whom that is also normal and acceptable. I distinctly remember this from the interview as well! He simply drops it in there that he married into the family, that it’s a family run company, that the family owns some significant portion of it… “family family family”… it was an odd interview. > but are you also self-insuring against a lawsuit for damage to the other guy's car? I guess their insurance company is going to come after me/my insurance company to pay up… yeah without insurance I’d simply hope I could reason things out with whoever. I’ve actually had to do that in the past. After a minor collision I asked the other driver whether we could settle things directly, and how much he’d feel was fair for me to pay to fix damage to his motorcycle. He named a figure and we drove to an ATM and I paid him that, we still exchanged info in case anything else came up but nothing did. Yes it was scary, but I think it was more efficient and less hassle in the end. This occurred in Los Angeles.
• asdfasgasdgasdg 5y ago
  While corruption may have been the source of this particular business, the fact that insurance is required by law is a good thing. The counterfactual involves a bunch of uninsured judgement proof drivers clogging the road and ruining everyone else's day/life. The problem is already bad enough now when it is illegal to do.
  • romwell 5y ago
    Hot take: if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees. Otherwise, it's just an income-generating scheme for private parties. Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court. They don't have to follow that the police report says regarding whose fault it is. How do I know? Got told that after getting into an accident on a road trip. So much for a good thing.
    • wbl 5y ago
      Depends on the state. Some have no fault allocation systems to avoid these lawsuits.
    • fn-mote 5y ago
      > it should be provided by the state and paid for with taxes / annual registration fees The free market is required to accurately price the risk for each driver. A 45 year old female driver with no infractions is much less risk than an 18 year old male with a DUI, so the former should pay less in premiums. The current system is doing that. I do not see how a state-provided solution would come up with "accurate" pricing for individuals. Some market is needed. I could see how some people (especially in high risk groups) would prefer not to pay according to their risk, but I do not agree that is better for society.
      • toomuchtodo 5y ago
        A government entity could perform this, no free market required. See residential flood insurance for a government based risk rating example.
• gurchik 5y ago
  > Are there insurance products that people are really satisfied with and trust will pay out in case of event X? I've always been happy with renter's insurance and have paid it since my first apartment in college. I pay $100/yr for a 50k limit policy. Unlike car insurance I am not required to have this, but I've always considered it to be worth it. I also pay for pet insurance. Again, not required to have it but when I considered cancelling and self-insuring I filed a claim and was immediately paid out hassle free. That convinced me to keep it.
  • heavyset_go 5y ago
    > I also pay for pet insurance. Again, not required to have it but when I considered cancelling and self-insuring I filed a claim and was immediately paid out hassle free. That convinced me to keep it. Don't get rid of it, the cost of healthcare for pets is quickly reaching the cost of healthcare for humans.
    • gurchik 5y ago
      I believe it. I had a high deductible health insurance plan and had a serious injury that required a hospital stay. Even though I paid for all of it before meeting my deductible, it was still cheaper than the medical costs I have spent on one of my three pets who is actually young and very healthy, but accidents happen.
      • heavyset_go 5y ago
        A family member's dog's ACL surgery cost more than the ACL surgery they themselves got a few years before. Pet medicine is filled by pharmacies and costs as much as human medicine does. It's nuts.
        • thaumasiotes 5y ago
          What's supposed to be nuts about that? The surgery costs the same no matter whether you want me to do it to a dog or a person. The pills cost the same whether you want to feed them to a dog or a person. That's exactly what you'd expect.
• romwell 5y ago
  Side story about how satisfied people can be with the mandated insurance. I was on coast-to-coast road trip when I got into an accident in TX. Someone was trying to pass me on the left in a turning lane, veered into the incoming lane, and then hit my vehicle's front wheels from the back. The police ticketed the other driver, and told me that insurance will surely take care of that on my side. "Wow, it's worse than we thought", they said, looking at the footage from the security camera. There were eyewitnesses too. Now, this was a $6K car (used Fiat 500) that I got specifically for the road trip, intending to resell it in the future. I didn't get comprehensive coverage for it, figuring that if I damage it, welp, it's on me; and if someone else does — that's why we have mandated liability insurance, right? ...I got zero ($0.00, zlich, nada) from the other driver's liability insurance. They informed me that their expertise concluded that the accident was my fault, and, by law, they don't have to abide by the police report. That's to say, the only way to get any money from them is to sue them, in TX. Figuring that the car is registered in California, and the damage was about $3K, they decided to not pay me anything at all. Because they can. Now, if I had comprehensive coverage, they'd be facing my insurance company — because one of those has to pay up. But they're facing me, so I'm welcome to sue or get shafted (with a nice side of gaslighting from the insurance agent, who was very convincing about how I should trust their assessment). The whole thing is a scam.
  • gizmo686 5y ago
    Whats the scam? The insurance company was hired to provide insurance for the other driver. By all accounts they did so. If the other driver had no insurance, your options would have been the same: hope they pay out of good will, or sue them. The public policy motivation for liability insurance is to protect the lawsuit route. If you sue an uninsured driver and win, you might not be able to collect (getting blood from a stone). But if they have liability insurance you can collect on a judgement. You choose to drive with only liabilty insurance, and are upset that insurance didn't cover an accident when you had no liability.
    • AQuantized 5y ago
      The 'scam' seems to be insofar as wealthy and powerful entities can exploit the functional inability of those less wealthy and powerful to meet them on even terms in the legal system. I think we could all agree that in an ideal world if someone is at fault, their insurance should pay out to those they damaged. The reality is that may only happen if you have an entity of similar magnitude to go to bat for you. That doesn't mean it's a good idea to not get comprehensive insurance, but police reports should probably carry some weight without requiring a suit.
• sheriffofpaddys 5y ago
  Title insurance is only required, to protect the lender, when you purchase a house using a mortgage. If you choose to buy with cash, you have no obligation to purchase title insurance, but imo you’d be wise to do so. Similarly, you are only required to have auto insurance for the damage you may cause to others. The only time you are required to insure the value of your car is when you have a loan since the lender is putting up the money/risk. There are many great examples of when to purchase insurance and many terrible examples (phone insurance comes to mind). I would argue that much of the problem stems from people not being educated on exactly what coverage levels they’re buying.
• tfehring 5y ago
  Disclosure: used to be an actuary at an insurance company. I think the general rule is that your insurance will reliably cover the things that it explicitly says it covers, but that category may be narrower than you think, so you should read the policy and figure out what your policy does and does not cover. For example, if you go to a doctor who's not in your health insurer's network, you're probably not covered. In some states, you can buy a "full coverage" (liability + comprehensive + collision) policy with a liability limit of $10k, so if you hit someone with your car and they have more than $10k in medical bills they can sue you for the balance. Your provider network and liability limit will both be spelled out explicitly in your policy documents, and neither concept is really that complicated, but if you don't know about them you could be in for a nasty surprise. Of course, all of that creates a giant pain in the ass for consumers, and that begs the question, why doesn't anyone just make an insurance policy that covers everything the policyholder thinks is covered? And the answer is that nobody would buy it! It would be more expensive (usually much more expensive) than its competitors, and people are generally very price-sensitive in their insurance purchases, and no one would read the fine print to see what they're actually getting for their money. P.S. The rabbit hole of stupid insurance regulation runs deep. Texas county mutuals are a fun example. Captive reinsurers are another.
  • Aloha 5y ago
    I'd love to know more about Texas County Mutuals! I find this stuff fascinating!
    • tfehring 5y ago
      It's a legacy category of company that gets favorable regulatory treatment (mostly in the form of more flexible pricing) for auto insurance policies written in the state of Texas. It's been illegal to form a new Texas county mutual since 1955, but the ~20 that have remained in existence since that time are still grandfathered in. Some of them have been acquired by big national insurers (e.g., GEICO fully owns one and has a controlling interest in at least one other), which issue policies on the county mutuals' paper and then cede (transfer) the business back to the parent company. Other county mutuals effectively license their favorable regulatory treatment to other, unaffiliated insurance companies. A significant minority of the auto insurance policies issued in Texas today are still issued on county mutuals' paper.
• DennisP 5y ago
  I'm satisfied. I've never had any trouble getting either auto or health insurance to pay out, and I've been a customer for 35 years. As for title insurance, there's no way I'd buy a house for cash without title insurance to make sure I'll actually own it, and I don't blame the banks for insisting on the same.
• gnopgnip 5y ago
  Do you want someone who is "self insuring" to crash into you?
  • d136o 5y ago
    No, but it’s an interesting scenario to think through because I don’t think the insurance status of the other party seems to figure into my planning. Our cars are fully paid for, and I’m operating under the assumption that it’s possible and for them to lose their whole value and I’d have to get a new car. Covering remaining damage to myself seems to turn into a health insurance event (I.e. how to cover medical costs) akin to suffering from cancer or another high cost illness. For both of those it’s expected that I’ll have to tap the piggy bank… Beyond that, the most dangerous scenario to guard against (if I don’t die) would be something that impairs my ability to continue to be employed, so I do pay for AD&E insurance… I’d hope they would come through, but I’m sure they find their ways to avoid payouts. Perhaps this matters if I felt like they’d harmed me enough to warrant trying to take them to court. In those cases though, it seems like I’d be handling higher order issues like actually trying to stay alive or recovering enough to get back to work.
    • gruez 5y ago
      >Covering remaining damage to myself seems to turn into a health insurance event (I.e. how to cover medical costs) akin to suffering from cancer or another high cost illness. >For both of those it’s expected that I’ll have to tap the piggy bank… But is that just? Why should you have to pay the costs (both medical costs and costs from suffering/loss of income) because of a wrong that someone else inflicted? Even if you bought good insurance and are relatively well protected against such events, what about people who aren't well insured?
• stefan_ 5y ago
  The joke there is that every driver in the US still needs to carry uninsured driver insurance because so many don't have any and there are no checks. And of course the coverage minimums are utterly laughable; put a kid in a wheelchair and you are looking at many many millions of damage, $100k isn't gonna cut it.
  • madengr 5y ago
  • thechao 5y ago
    I watched a four-tone college Corolla rear-end a metallic fleck baby blue Bentley being driven from N to S Austin. Since I was stuck there (caught in the pileup, but undamaged), I chatted with the valet. He said that the Bentley would be totaled -- no purchaser would take it, obviously. He said the dealer insurance would handle the whole thing; there was simply no point in even calling the kid's insurance: the car was probably easily 5-10 times the kid's liability limit.
    • seoaeu 5y ago
      That seems silly given that the cost of the phone call is surely orders of magnitude less than the insurance payout. What kind of business is going to forgo a four or five figure check like that?
• poulsbohemian 5y ago
  >Title insurance when buying a house also seemed like a total “legally required” joke. Real estate agent checking in here... I agree with you, but there's always a but... the problem is that there really are situations where there's a cloud on title or where title is questionable. This doesn't mean there's anything nefarious going on, and it also often isn't a question of history (IE: title recorded on parchment or something). It also seems to me that some states are just better at maintaining good title records over others - and again, I'm not convinced this is directly related to the timespan of recorded history. So the problem then is an 80/20 or a 99/1 thing... 90+ % of properties the title insurance is going to be a waste of money. But in those few cases, it really could make a difference. Since the amount of money involved is usually quite small, especially relative to the size of the transaction, it becomes really hard to change the system.
  • derbOac 5y ago
    Not to sound snarky, but this was my reaction as well. It's also the very nature of insurance: you get insurance to cover the rare but costly problems that arise. If they're not rare, you don't need insurance because you address the problems another way.
    • poulsbohemian 5y ago
      Yeah, that's exactly it. I know I've certainly spent spare brain cycles considering it, and there seem to be a number of startups trying to create cheaper title insurance, but it's not clear to me how to really solve the issue. Basically it's a human behavior and record keeping problem. You have to have perfect records, and you hope some estranged cousin doesn't magically popup with a deed someday claiming to own your house. So, you fork over $1000 just in case. I'm actually in a transaction right now where the title history is weird and questionable. Will the insurance be a factor? Probably not, ironically, but it's exactly the kind of scenario for which this kind of thing exists.
      • d136o 5y ago
        When we bought our house, after our down payment and on our way to closing I asked a question to the escrow/title insurance person: * the disclosures show two slightly different figures for the dimensions of the lot, which one is it? (County mapped shows Width W and another owner provided map showed W-1ft or something like that) Instead of doing anything to try to figure it out, this title insurance company (also doing escrow) lowered the tier of title insurance they were willing to provide LOL Because this was a material change, once they saw we wouldn’t go through with the transaction without the best coverage they changed their minds about and said that they’d title insure at the highest level… but only once we pushed them on it… Nobody did any more work to settle the question than us, who went to the house and measured to determine which dimension was right…
• acchow 5y ago
  Title Insurance is anachronistic. In the internet age, there should be open APIs for someone to check the liens and names on titles. I guess this is 2021 so...something something... blockchain...?
  • refurb 5y ago
    Title insurance covers things like property line disputes, mistakes made by titling companies, etc. It’s far more than “who actual owns this parcel of land”.
• refurb 5y ago
  Insurance is meant to pay out for catastrophic events. It has expanded into silly products like dental insurance which often has caps like “maximum $5,000 lifetime claim for orthodontic”. What it is a basically a savings plan - you and your employer contribute X and the insurer pays out 0.9X in predictable costs. Insurance is fantastic for personal liability, title insurance, health insurance when you consider the low probability of event ruining you financially. In terms of helping with regularly occurring costs? No they are terrible.
• zeckalpha 5y ago
  Mutual companies like State Farm where policy holders receive dividends in the form of discounts make this less of an issue.
• s1artibartfast 5y ago
  And this is not just old laws, states are starting to implement mandatory long term care insurance. Another scam, where it doesn't matter what kind of retirement setup I have
• HWR_14 5y ago
  You aren't required to get car insurance for your benefit, you are required to get insurance to pay off the people you hit. Look at areas with low insurance rates (like Philadelphia) and tell me that's the situation you want. Meanwhile, title insurance isn't legally required. It's required by your mortgage company to protect their money.
• throw0101a 5y ago
  > Are there insurance products that people are really satisfied with and trust will pay out in case of event X? I feel like I’m self insuring when it comes to car and healthcare at least. If you mess up in your car, and kill someone or turn them into a quadriplegic so they need a 24/7 nurse, do you have the several million that it would take to 'pay off' the victims for the suffering you caused? The most important part of auto insurance is not the cost of fixing/replacing any cars involved in a crash, but the liability component.