The whole concept behind the insurance industry is to minimize risk. The voluntary customers are minimizing their
risk of either doing more damage than they can afford or of having medical problems eat away their savings. For
the insurance industry itself, there is the need to minimize the risk of paying out money for losses. So, these
insurance companies have their own programs to minimize risk, and some of the actions they take to minimize their
risk are to the detriment of the American people.
When the United States was started, it was all about risk. Freedom is risk. Our founding fathers gambled their
lives and fortunes to ensure that people could take risks and follow their heart's dream. Taking risks is what
made this country great. The structure and patent protections of this country allowed new inventions to the market
that made life better. Some of those inventions took off. Many died. Of all of the inventions out of Edison's
research lab, how many do we remember? The phonograph, the light bulb, movies? They earned thousands of patents,
but many were duds. How many experiments did they have to do before coming up with a patent-worthy device?
Without the freedom to take risks, they would have had nothing. America was settled by risk takers, and risk
taking has stood the test of time ever since.
Now, I'm not advocating risk taking to the point of stupidity, although allowing such does tend to improve the gene
pool. But I am advocating the freedom for people to make their own decisions, informed or not, about what risks
they are willing to shoulder. I ran a business for more than three years. I could accept that level of risk, and
it was my choice to do so. Others would never take a chance like that. That is their choice. It is my belief
that the insurance industry's attempts to minimize their own risk have worked on the American psyche to create a
nation of wimps who are afraid to take risks.
Let's look at some of the things that have happened in the last forty years and judge their effects. When I was a
child, my father installed seat belts in his car. Seat belts were not standard in the car. He took the time and
spent the money to minimize the risk of himself and his family. I don't know what the cost of this little
operation was, but it was his decision to make and invest in. Since then, insurance companies and consumer
advocates have lobbied to make cars safer and have seat belts as mandatory safety equipment. This means extra
costs for the consumer, but I am sure that over all, it is still a good thing. Although it is a higher cost for a
consumer who would not install safety belts did they not come in the car, it is a lower cost because of mass
production for those who want and use them. They are probably also installed more securely when designed into the
car, than when installed by someone like my father. So far, so good.
My main concerns about insurance industry efforts to reduce their risk are those that involve lobbying of
governments to pass laws that favor them. In many states, there are laws that mandate motorcycle helmets, safety
belt use, child safety seats, driving without cell phones, or sober driving. Now all five activities are worthy
ways of reducing risk for both the individual and for the insurance company. Insurance companies could encourage
the behaviors through discounts as they do with non-smokers and non-drinkers for life insurance. However, when it
comes to influencing legislatures to pass laws demanding that people reduce their risk, they step over the line.
Laws do not make people do the insurance industry's bidding, but they can make the risks of not doing so too high
to bear for most people. You may get a ticket and points on your license for not complying with any of these laws,
even though no one has been hurt and no property damaged.
Another group of insurance industry engendered laws are those that require you to have a type of insurance. Auto
insurance laws affect the most people. Many states require you to carry insurance to keep your license or register
a car. Shouldn't it be up to the individual to determine their risk and decide whether to have insurance? States
have literally mandated that we have to give some of our money to insurance companies should we wish to drive a
car. Will they next mandate that we buy a car to support the auto industry? Since when does government have the
right to tell us how to spend our money? Couldn't we allow the risk of self-insurance?
The emasculated American public now seems to want to avoid the simple risks of life. The old American risk-taking
values have been nearly destroyed. We sit back and accept this usurpation of our right to risk. Too many of us
would trade our freedoms for safety. This just isn't the American way.
F. B. Knight is Curmudgeon-in-Residence at the Attila the Hun School of Management. He can be reached for questions at
fbk@attilathehunschool.net.
