The insurance industry, while theoretically a community-based safety net, operates as a for-profit business with an incentive structure that prioritizes profit over customer well-being, leading to widespread distrust and predatory practices.
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Is paying for insurance really just a
massive scam? In theory, insurance
should be really simple. You pay a
little money each month, the company
holds on to it, and when something bad
happens, they've got your back with a
big lump sum of money waiting to help
you out. So then, why isn't it this
simple? Why don't people trust insurance
companies? Why does everyone hate them?
And if insurance companies really are
doing some shady [ __ ] then how the hell
do they keep getting away with it? By
the end of this video, you're going to
know everything you need to about the
insurance industry and how for a
business built on trust, it's done just
about everything to lose it. Let's dive in.
in.
In theory, insurance is a beautiful
idea. Everyone chips in a little money,
and when something bad happens to
someone, that collective pot pays to
help them recover. It's like an
emergency fund, but for the entire
community. Let's say we've got 10 people
in our community. They all drive cars
and pay for insurance. When someone has
an accident, the insurance company has a
bunch of money waiting for them. So far,
so good. Sounds fair. But things get
messy pretty quickly because that
insurance company is not a charity. It's
not a government organization with the
sole purpose of helping people. It's a
forprofit business, which means they
only make money when they don't pay you.
Every claim that gets denied, delayed,
or underpaid is pure profit. So their
entire incentive structure is completely
upside down. They're not in the business
of doing good. They're in the business
of making money. And they make the most
amount of money when they don't have to
pay you. Quite literally a wolf in
sheep's clothing. They wear a facade of
safety and good intentions. While behind
the scenes, they're one of the most
profit- hungry and predatory industries
in the entire world. So profit hungry,
in fact, that these days they're
functioning more like hedge funds than
safety nets. Let me explain. If we go
back to our little 10person community
example, as the insurance company, we've
got 10 people paying us insurance
premiums every month. Let's say $100
each. And on average, we have one car
crash per month, and we pay out up to
$500 per crash. So in January, we take
in $1,000 from our customers. We pay out
500 for a single accident, and we have
500 chilling in our account. February
comes along, same thing. $1,000 in, $500
out. We now have $1,000 chilling in our
account. This bank balance starts to add
up over time. So, what are we going to
do? Are we going to leave it sitting
there in cash earning a pathetic little
interest rate from the bank? Absolutely
not. We're going to invest it. And so
insurance companies have become some of
the biggest investors worldwide. In the
US alone, insurance companies now sit on
around $9 trillion worth of assets.
Around 60% of that sits in bonds, very
safe, corporate and government debt.
Around 13% is in stocks. 9% is in
mortgage loans and property. And about
6% is in alternative investments like
private equity, hedge funds, or private
credit. So, not only do they have a
bigger pile of cash sitting in the bank
when they don't pay out claims, but they
also get to invest those dollars to earn
even more money. The logic for the
insurer is simple. The longer they hold
on to your money, the more they can make
from it themselves. Again, in theory,
this is all pretty fair. Rather than sit
in a pile of cash that's decreasing in
value due to inflation, let's invest it
and we'll have even more money to help
people in the case of emergencies. Well,
that's exactly where the [ __ ] hits the
fan. Because they don't pay people their
money to help in case of emergencies.
And here's how they get away with it.
Here's tactics these scumbags use to get
out of paying you your money. One,
delay. Delay, delay. The easiest and
most common tactic, delay and deny.
They'll lose your paperwork, ask for new
documents, request extra medical
records, or claim they're waiting for a
third-party assessment. None of which is
actually going towards verifying your
claim. It's simply to exhaust you until
you give up or settle for less. After
Hurricane Katrina, for example, tens of
thousands of homeowners fought insurers
for years trying to make claims, but
many eventually settled for pennies on
the dollar because they couldn't afford
the lengthy legal battle. Tactic two is
reclassify the risk. So, first they
write sneaky rules and clauses into the
fine print and then they use them to
screw you over. Oh, your car was stolen.
Well, technically your policy only
covered vandalism. Oh, your roof caved
in. Seems a lot more like wear and tear,
not storm damage. It's the oldest trick
in the book. After Katrina, thousands
were told their destroyed homes weren't
covered because the flood caused the
damage, not the wind. Health insurers do
the same thing. They'll reject a surgery
or medication as not medically
necessary, even if your doctor
prescribed it. And some companies even
use AI systems that autodeny claims in
under two seconds without a human ever
looking at it. Basically, anytime you
file a claim, there's a good chance your
insurers's first move isn't to help you.
It's to figure out what word they can
swap in to make sure you don't qualify.
Tactic three, use your data against you.
The scumbags have started calling it
personalized pricing. What it really
means is constant surveillance. Your car
insurance app, it's not just tracking
your speed. It tracks what time you
drive, how fast you turn, and how hard
you hit the brakes. You regularly drive
at night or in high-risk neighborhoods.
Congrats. You've just scored a 30%
premium hike. Same goes for health and
life insurance. They're now tracking
your fitness data, your medical
prescriptions, and even your social
media. Mr. Gym session last week, smoked
a cigarette last month. Awesome. Your
risk profile just changed. And it's not
just passive data collection. They
actively buy data from brokers. Health
insurers, for example, will purchase
consumer databases showing what food you
buy, where you travel, and whether you
pay your bills on time. Why? Because all
of that helps them predict how
profitable you are as a customer. And
let's say that data makes you seem
high-risisk. They're not going to
outright deny you. That would look bad.
They'll just quietly raise your premiums
until you can't afford to stay insured.
And they'll label it riskbased pricing.
And when all else fails, tactic four,
bury you in bureaucracy. They know you
don't have time or energy or money to
fight them, and they use it as a weapon.
Resubmit the same form three times, wait
on hold for 2 hours, get transferred
through five different departments. Some
companies literally have internal
metrics for how long they can delay
before a customer gives up. After
Hurricane Ian, thousands of homeowners
in Florida were stuck in this exact
nightmare. Months after the storm, they
were still waiting for basic claim
assessments while the insurance
companies quietly filed for bankruptcy,
leaving families homeless and unpaid.
You need to realize that this is not
some fringe tactic. It's an industrywide
strategy. There's even a phrase for it.
Delay, deny, defend. Delay the claim,
deny the payout, and defend the decision
in court until the customer breaks. And
if you do have the time, money, and
patience to take it to court, they've
got a full legal team ready to drag the
process out for years, knowing that by
the end of it all, you'll probably
settle for pennies on the dollar just to
make it stop. Which is tactic five,
lowball and settle. So once they've
exhausted you mentally and financially,
they'll come back with an offer that's
technically a payout, but nowhere near
what you're owed. Your $20,000 car that
just got wrecked, well, our independent
appraisal valued it at only 11,000. Take
it or leave it. Oh, your house burnt
down. Okay, well, the policy only covers
replacement cost, conveniently ignoring
the fact that construction prices have
doubled since you bought your plan. And
the sad thing is, most people take the
offer simply because they're exhausted.
But something that's always confused me.
How the [ __ ] do we know that these guys
do all this shady [ __ ] and yet they're
able to get away with it? Well, let's
find that out. All right, quick
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channel.
So, how the hell do they keep getting
away with it? Short answer, the system
is built to protect them, not you. For
starters, insurance regulation is a
complete mess, especially in the United
States. Unlike banks or airlines, which
are regulated at the federal level,
insurance companies are mostly regulated
state by state. 50 different sets of
laws, 50 different regulators, 50
different definitions of what counts as
fraud, fair, or unreasonable delay. And
so if a company gets caught screwing
customers in Florida, they just keep
doing business in Texas and California
and wherever else. Then we've got
regulatory capture. And this is the
revolving door stuff we touched on in my
previous video on Congress. The people
regulating the industry will receive
massive job offers to leave and beat the
laws and regulations they helped write.
And people within the industry get
massive dollars behind them, end up with
a seat at the table of the regulators,
and run the show from the inside. And
it's not just regulators. Insurance
companies spend millions in lobbying and
political donations every single year.
According to Open Secrets, the industry
spent over 160 mill in 2024 on lobbying,
more than oil and gas and more than
defense contractors. So, the people who
are supposed to be protecting you are
also taking campaign donations from the
people screwing you. And then there's
forced arbitration. Buried deep in
almost every insurance contract is a
clause that says you can't sue them in
court. You have to go through
arbitration, which is a private process
run by a neutral third party. Ah, yes,
the good old neutral third parties that
get paid by the insurance companies.
According to the American Association
for Justice, consumers win less than 20%
of arbitration cases. And then when the
regulators do put on their big boy pants
and find an insurance company, the
penalties are piss poor. State Farm once
paid 250 million fines for denying
hurricane claims. That same year, they
still managed to pull 3.8 billion in
profit. And so the cycle gets to
continue endlessly. Deny, delay,
lowball, and if you fight back, drown
you in red tape. And if you somehow
manage to survive that arbitration,
legal loopholes, and [ __ ] regulators
waiting right behind it. So yeah,
insurance is supposed to give you peace
of mind. But the truth is, it's an
illusion of safety. You're not paying
for protection, you're paying for hope.
The sad part is we need them because in
a world where hospital trips cost as
much as houses and natural disasters
wipe out entire towns, you can't not
have insurance. So, we keep paying month
after month. And that's the evil genius
of it all. They've built a system where
they win if nothing happens. And they
still win even if everything goes wrong.
So, is insurance a scam? Well, if
someone takes your money, promises to do
something in return, and then does a
bunch of shady [ __ ] to leave you worse
off when you needed the most? What the
else would you call it? That's all for
this video. Hope you enjoyed. Please
remember to like, comment, and subscribe.
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