Insurance companies are institutions established to provide financial protection for individuals and organizations against various potential risks. These companies assume risks in exchange for a specific premium through insurance contracts and compensate for any material damages arising from potential adverse events.

The origins of insurance trace back to around 3000 B.C. in ancient Mesopotamia, specifically the Babylonian period. At that time, there were agreements between those engaged in shipping and trade to share risks. The Code of Hammurabi also included rules aimed at compensating merchants for losses if their goods were damaged.

However, today, the profit-driven practices of insurance companies and some of their policies can at times create a sense of injustice in society and may reduce accessibility to services. Profit-driven policies, insufficient or challenging compensation payments, asymmetric information and lack of transparency, price increases, risk selection, and discrimination underscore the need to transform the insurance sector into a more transparent structure that considers public benefit.

The top five insurance companies in America generated a total income of $323 billion in 2023. This revenue breakdown is as follows:

State Farm: $104.2 billion
Berkshire Hathaway (GEICO): $39.3 billion
Allstate: $57.1 billion
Progressive: $62.1 billion
Nationwide: $60.3 billion
In the same year, these five companies made a total of $184.6 billion in expenses and damage payments:

State Farm: $53.4 billion
Berkshire Hathaway (GEICO): $24 billion
Allstate: $36.4 billion
Progressive: $48.2 billion
Nationwide: $22.6 billion
While the total expenses and payouts of these five companies amounted to $184.6 billion, the gross profit remaining with insurance companies was $138.4 billion. The allocation of this amount should be transparent since these premiums are collected from the public and belong to the public.

With this amount:

60 George Washington Bridges or 50 Golden Gate Bridges could be built.
500 large hospitals, 800 middle/high schools, or 500 university buildings could be constructed.
3,000 public sports centers (YMCA) could be established.
As can be seen, with the amount collected by insurance companies in premiums from the public in just one year, dozens of bridges, hundreds of hospitals, or thousands of schools could be built. Furthermore, many public sports centers could be established, enhancing the quality of life for the American people.

So, where does this money go? Insurance companies typically direct the premiums they collect into financial markets and interest-bearing investments. The returns on these investments are mostly generated from money that comes out of the public’s pockets. Since insurance policies are usually mandatory, people are required to pay premiums for many years. While a significant portion of these premiums transforms into the investment earnings of the companies, there is no reimbursement for policyholders.

For example, an average American might pay about $70,000 for home and auto insurance over 20 years. Insurance premiums vary based on state, coverage, and personal factors. As shown, a person paying insurance premiums over 20 years without filing a claim cannot recover the $70,000 paid. These funds contribute to the financial gains of insurance companies. The excess funds collected by insurance companies are invested in financial markets and interest-bearing assets. This process indirectly leads to more money coming out of people’s pockets. Stock speculation and the interest cycle create a system that turns without providing real production or investment value. In other words, there is no production, no investment, no employment. It harms the American people without benefit.

In conclusion, while insurance companies and their executives earn billions of dollars from this system, the American public suffers significant losses. The insurance system, initially established to assist people in cases of accidents and natural disasters, has transformed into a system where large companies collect money from the public by force, with the aid of the police.

As the majority of insurance premiums turn into investment income for companies, the lack of reimbursement for policyholders creates a significant injustice. Insurance regulations need to be restructured to favor the public. People should be able to claim a portion of the money they pay and ensure that insurance regulations benefit the public.

Hopefully, one day we will achieve a fair insurance system where the public’s money stays with the public.

Stay well.