Ibby (The Artist Formerly Known as Chris) writes:

Perhaps true but it serves a purpose with the likes of serious or
fatal injuries.

A better policy is to avoid serious or fatal injuries.

In the past I've worked for some companies that were self-insured. The
overall cost to them of paying for employee healthcare directly was far lower
than the cost of premiums paid to insurance companies. This was mainly
because the total premiums for insurance were vastly greater than the total
payouts, thanks to a handsome profit margin built into them.

This works best when you can spread risk over a large number of aircraft or
pilots. It also assumes that you will not be expected to make ridiculous
payouts as a result of litigation.

However, insurance companies encourage the above to some extent by regularly
settling with plaintiffs rather than going to trial. They just add the payout
to their premiums. Insurance companies don't care how many payouts they make,
as long as they preserve their margins. If that means forcing you to pay
$8000 a month for insurance (which you'll probably never need), that's your
tough luck, not theirs. They never lose money.

Indeed, the mere existence of insurance encourages huge damage awards in
litigation. People assume that others are insured, so they don't hesitate to
ask for large amounts of money. An insurance company can pay out $2 million;
an uninsured individual cannot, and there would be no point in suing the
latter.

Money makes the world go round so what better way to penalise worse
drivers and/or pilots by increasing their premiums for the higher risk
they pose to others.

The whole idea of insurance is to spread the risk, such that everyone pays to
some extent for the payouts to a few. If you adjust premiums too much, the
net effect is to have no insurance at all: the low-risk people pay nothing,
the high-risk people pay exactly what they would pay if they had no insurance
to begin with.

Furthermore, penalizing poor pilots within reason might make sense, but in
today's litigation-crazy society, the penalties are ridiculous. And having
insurance doesn't make them go away, it just guarantees that you'll pay them
whether you are involved in litigation or not.

I guess you can just pay premiums without complaint, but they will only rise,
and one day you won't be able to pay them, and then you won't be able to fly,
either.

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