It is important that we understand that insurance is a bet. The insurance company is betting you won’t use them and you are betting you will. Unfortunately, they are experts at knowing how to deceive and deny.
Coronavirus has exposed Britain’s insurance industry as a shambles | Josie Cox | Opinion | The Guardian
The concept of insurance is marvellous. Individuals or corporations pay to spread risk across a large community, creating a greater degree of financial security and peace of mind, regardless of what challenges might end up materialising.
In many cases it’s worked flawlessly for centuries. Businesses burned to the ground can often emerge from the ashes in a matter of months. Disability and sickness mustn’t spell certain bankruptcy. In the 18th century, the wives and children of deceased members of the Amicable Society for a Perpetual Assurance Office were guaranteed cash, thanks to what’s believed to be one of the earliest examples of life insurance as we know it.
The insured should be able to rely on an uncompromising safety net in the toughest of times, and yet – as we’re enduring precisely such a time – coronavirus is adding debilitating insult to unprecedented injury by exposing the shortcomings of the insurance sector: the system we’re using is not fit for the modern world, and the cost of these deficiencies could well be cataclysmic.
It wasn’t always like this. In years gone by some insurers were more forgiving when it came to paying out when disease struck
In theory everything looked quite all right. The vast majority of companies across the UK and beyond tend to have business interruption insurance that pays when they can’t operate. A similar type of insurance, known as contingent business interruption insurance, comes into play when a critical supplier to an insured organisation can’t function. If you’re a company that makes smartphones in the US, but the Chinese factory supplying your microchips suddenly floods, you’re likely to be protected. A French luxury goods company whose Indian fabric manufacturer has been wiped out by a storm? Same thing.