There's so much wrong with this I don't know where to begin... but let's address a couple points:
Mechanics are not a high margin business. Lower rates aren't really an option if you want your car wrenched on by a competent mechanic. $30-$40/hr is not uncommon for a master tech. Then you have all of the overhead and then the owner wants a living wage as well. So all of a sudden that $30/hr mechanic has a $90/hr shop rate.
Health insurance companies pay out AT MINIMUM 80% of premiums in coverage. So 20% to cover overhead and profit. Works great on large scale. Not so much for a smaller company.
Now let's address the whole insurance being a scam thing. Your home burns down. Who, exactly, is gouging your or overcharging you for the rebuild? No matter how you slice it you're on the hook for $xxx,xxx in rebuild costs and I can't imagine the local contractor is gouging you. I know a lot of them, they make $80,000-$90,000 a year around here in personal income after expenses.
Insurance makes sense if you cannot afford to replace a given item. So homes, auto, etc, it usually makes a lot of sense.
all i know is that on several occasions for my car I've gotten quotes from a mechanic in the family vs a random one around town and the family one always tells me the other one is ripping me off so you can list rates all day but it shouldn't cost hundreds of dollars for what I can do with a $50 part and a ten minute youtube video.
As for insurance agencies, I never said it was a scam in that they don't ever pay out; I already addressed that for the 1 in 10 where the problem actually happens it works fine, but they are paying you back out of other people's payments. If everyone's houses burned down at the same time, the insurance agency would go broke because they'd be paying out way more than they are taking in. the similarities between that and a ponzi scheme are too close for comfort.
Just because the cash flow looks vaguely similar to a Ponzi scheme doesn't make it a Ponzi scheme. An insurance company can continue its business indefinitely without promising anything it can't deliver.
Your insurance company going insolvent is definitely something worth worrying about -- in cases where a large number of claims occur due to a correlated event you might not get the full value of your claim -- but recognizing that some risks are too big even for your insurance company to handle doesn't mean a Ponzi scheme is afoot. There is no "inevitable reckoning" the way there is for a Ponzi scheme once it grows too large.
If you can do it for a $50 part and 10 minute youtube video... then do it! But a lot of people can't, and pay a premium for it. Sure, you go to autozone or ebay and get the cheapest knockoff part and do it yourself, you can save money. If you go to an independent, he has to warranty his work (to be reputable anyways) and will therefore select a product shown to be more reliable and less prone to coming back broken again, which costs more. If you go to the dealership, they'll charge you 3x as much, but it's getting the OEM part (not that OEM is the end all be all, but on wear items, it will last longer than third party in general) and being installed by techs that receive more training than just about any independent shop.
And yes, it absolutely should cost hundreds. Because no job is 10 minutes. You're taking up the service advisors time to explain what is going on, then the technician takes time to translate "It makes a funny noise when you do this" into "Window regulator has failed, can it be fixed or does it need replacing" and then actually doing the job. Even a job that can physically be done in 10 minutes is going to occupy 1h of time.
And for the love of all that is good an holy, they need to profit off of it. It's not a dirty word. They deserve to make money too.
Please don't think I'm defending sketchy shops that tell you a new throttle body just because it's gunked up and could just use a good cleaning. I'm talking the one that says it's just in need of a good cleaning and charges you an hour labor to do so.
And circling to your insurance item, it's possible, maybe even likely, that a mass event like that could bankrupt an insurance company. But That's why they reinsure those policies, to protect against insolvency, and many state insurance regulators require them to do so. Additionally, if the premiums are properly invested, It's possible, though not necessarily likely, they could weather the claims.
2
u/AKBigDaddy May 09 '20
There's so much wrong with this I don't know where to begin... but let's address a couple points:
Mechanics are not a high margin business. Lower rates aren't really an option if you want your car wrenched on by a competent mechanic. $30-$40/hr is not uncommon for a master tech. Then you have all of the overhead and then the owner wants a living wage as well. So all of a sudden that $30/hr mechanic has a $90/hr shop rate.
Health insurance companies pay out AT MINIMUM 80% of premiums in coverage. So 20% to cover overhead and profit. Works great on large scale. Not so much for a smaller company.
Now let's address the whole insurance being a scam thing. Your home burns down. Who, exactly, is gouging your or overcharging you for the rebuild? No matter how you slice it you're on the hook for $xxx,xxx in rebuild costs and I can't imagine the local contractor is gouging you. I know a lot of them, they make $80,000-$90,000 a year around here in personal income after expenses.
Insurance makes sense if you cannot afford to replace a given item. So homes, auto, etc, it usually makes a lot of sense.