Micro Insurance – “with a little help from my friends”

Kate‘s car was broken into recently and her laptop stolen.  She wrote a sad message about it on Facebook and went off to a fitful sleep about where she was going to find the money to replace it.

When she woke up, her friends had rallied.  Half the money for a new computer had already been pledged.  By the end of the day the rest was in and the replacement computer identified.  Many people had pledged $20, but there were so many pledges and the replacement machine was such a good deal, that people only had to pay $10 each.  Hawina’s partner Corb was the key organizer for finding and securing the new machine.

This is social networking at its finest.  People being generous and solving real needs.

She is not smiling about the computer, she is often smiling

i’ve lived in collective houses where we had self insurance funds.  Five or ten dollars a month is added to the rent and people can draw down the fund for things which are lost or stolen with the houses permission.  If there are no claims or only small ones, at the end of the year the money is used for a party (or in one case a new washing machine).

And as with any sharing system (in this case risk sharing) the devil is in the details.  Does the house really want to pay for a new bike for a member who keeps leaving it unlocked?  What about someone who is regularly forgetful ? Paying for their mistakes can easily spark resentment.

But rather than relying on nasty insurance companies, persons interested in building a new world should be taking on these challenges and practicing this difficult communication.  There is tremendous leverage in this type of self insurance.  Some thing we need to be doing collectively far more.

Corporate insurance is a clever organized crime scheme

When i was a kid at one point i got bumped up to first class in an airplane for reasons i dont remember.  I sat next to an insurance executive and i asked him about his business.

“Insurance is a very good business” he said. “We are required to charge rates that give us profits.  Every insurance company is re-insured in case they have claims beyond their capacity and no new insurance company can start up, unless the existing companies agree that a) there is a need for the products the new company is offering and b) that the existing companies dont want to provide these services.”

Even at this relatively young age, this struck me as especially clever form of organized crime.

Insurance is a big issue for communities, especially medical insurance.  And unexpected set of medical bills can financially wipe out a community, just like it can wipe out an uninsured family.  What the egalitarian communities have done is opted for a self insurance system for catastrophic health costs.   After over 20 years of operations, we have not only a great track record of covering needs, but 80% of this fund is lent out to support start up communities and community businesses.

Of course the deal with self insurance is that you are at risk during the early part of the game, when the reserves you have do not yet cover unexpected costs you might incur.  But we have been doing this for a long time and the fund regularly covers the catastrophic health costs of members who have significant needs.