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Why Does Insurance Exist?

Insurance_Policy_croppedI promise not to write too much this time.

No, really.

But I did read a very interesting article about the philosophy behind insurance, and how it has evolved over the years.

http://www.theatlantic.com/business/archive/2012/05/have-insurance-companies-forgotten-the-meaning-of-insurance/256677/

But who wants to read a scholarly article about the history of insurance anyway?

Well, I found myself drawn to a very interesting one today. The article examines the theories and philosophies behind insurance, the insurance industry, and traces the history of how the definitions, intentions, and philosophies of insurance have evolved over the years.

Nope, it's not quite as exciting as the watching The Voice or American Idol to see who makes it or who gets dumped. It's not even as interesting as reading about Kim Kardashian in the latest People magazine. But if you take a bit of time to wade through it, it probably is a heck of a lot more relevant to your life than the other options for entertainment.

As a personal injury lawyer, insurance is a big part of my work, since in the vast majority of cases I am pursuing the insurance coverage from the person who harmed my client or from the employer of an injured worker.

After all, don't we all NEED to have auto insurance (at least that's the law in Illinois and most states)? Isn't one of the largest hot button political issues in the country about health insurance and whether it's a right or a privilege, who should provide it, and who should pay for it?

If you think back not all that long ago, say a century, if you got hurt at work or in another type of accident, it was truly tough luck. Not many options available for putting people back to where they were. Now most of us view work-related injuries, automobile accidents, and serious medical errors or product defects as things for which we should receive some measure of compensation.

Or is the purpose of insurance to avoid paying as many claims as possible and make as much money as is available in the process?

I don't pretend that there is a "right" answer in either extreme but the article got me thinking about what we believe to be the purpose of insurance in the first place.

If you can, take the time to read the article and think about where insurance, and the remedies we have to help compensate people for various harms under the law, intersect.

If you work in the insurance industry your thoughts may be very different if you work as, say, a plaintiff's personal injury lawyer, or if you are the owner of a small business. Again, there is no "right" answer to the question of "what is the purpose of insurance in our society," but there is a great big swath of territory to mull.

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