On February 8th, a new casino opened in my home town. The Rivers Casino is now operational and “redistributing wealth” on behalf of those who enter its doors. Some will win, most will lose, the house will win a cut; so too will the tax collectors in our city, county, state and, of course, the IRS. The potential to win is a strong motivator to those who choose to exchange their hard-earned money for a chance at the slot machines, craps tables and roulette wheel. I guess it is fun for some people, though I admit I have never found gambling to be all that alluring. Still, the gambling industry stands in stark contrast to my profession.
The insurance industry affords a vehicle that is focused on indemnification only: the restoring of the policyholder back to where they were before the winds of life blew against them. There is no potential to profit from the properly written insurance program. Case in point, should a tree fall through your roof, as it did mine this past spring, the Homeowners insurance policy responds by paying the cost of the tree removal contractor to cut up and remove the tree. Then it pays for a carpenter’s cost to replace the garage door damaged by the piercing limbs. When all of the sawdust was settled, in my situation, I had a sound roof back, a working garage door and a driveway clear to allow my car access to its storage place.
While there was no potential to win a profit as with the new casino, I was pleased that the inconvenience of this unexpected incident was fully covered by the insurance company. From their point of view, writing an insurance policy is a gamble. They are betting that trees will not fall on my garage. So certain are they that this will not occur, they are willing to put in writing, that they will pay up to the garage’s worth that nothing will happen to it: fire, lightning, windstorm, hail, falling objects, vandalism, etc. In exchange for this promise, they charge me a much smaller premium for the arrangement. To better their odds of winning at the arrangement, they will ask me questions about the garage’s age, distance from neighboring trees, date of the roof’s last replacement, etc. Insurance companies ask underwriting questions because they want to improve the odds that neither they, nor we, will have to experience a loss and cut into their winnings. I will not editorialize as to whether or not I am glad that there is a new casino in my city, but I am very pleased that I am protected by a sound insurance program in order to save me from losing when I roll the dice of life: Homeowners insurance, auto insurance, life insurance, health insurance, disability income, and most recently, long-term care insurance. I cannot stop the winds of life, but I can reduce the gamble that I am going to lose. This is my definition of winning.