Insurance – Hedging Against Future Catastrophe

A construction worker sends sparks flying at a major project in Oakland, CA.

(Photograph by Anthony C. LoBaido)

SILICON VALLEY, CA. – What could possibly go wrong? It is a question builders, movers and shakers often ask themselves. Since ancient times, human beings have sought to hedge their bets against calamities and failure. Both barter-based and financial economies have worked to mitigate against the unknown.

The Bible tells us that Noah built his ark. Conversely, we are also told that the Philistines – a sea-faring people from ancient Greece had no insurance for Samson pulling down their temple in ancient Israel. Joseph and his “coat of many colors” saved all of Egypt and the surrounding nations through the use of granaries he filled after predicting a famine that would come to the region. The ancient Babylonians and Chinese are amongst the first to engage in various forms of “insurance.” The Code of Hammurabi contains specific examples of how commerce should be underwritten by businessmen of that time.

In Ancient Rome, one of the wealthiest men who ever lived – General Crassus – made his fortune (at least in part) but inventing the world’s first fire department. In effect, if a Roman wanted a raging fire put out, Crassus’ firemen would do so, but only if that citizen would sell their property at a discounted price to Crassus. If they didn’t sell, his men would simply let the property burn to the ground. Construction methods back then were not what they are today in the United States. As such, Crassus became both filthy rich and emboldened to seek office.

Eventually he took over the Roman Army and tried to march all the way to India, where riches beyond his wildest dreams awaited. However, his soldiers were annihilated near what is today’s Anbar Province in Iraq. Crassus’ head was severed and placed in a Pike at a Persian banquet – after gold was poured down his throat. Today we remember Crassus’ actions through the use of the word “crass” in the English language. The lesson is well learned – risks must be hedged and backed up with “fail safe” plans. An excellent book about Crassus can be reviewed here.

Fire insurance didn’t really take off until the Great Fire of London in the year 1666, when more than 13,000 homes created a real barn burner. Perhaps this was a turning point for the idea of “insurance” as something ordinary, everyday people needed and could count on.

In postmodern times, we have insurance for our cars, health, life and death, cargo, transportation, construction and many other areas of human endeavor. CEO Thomas Rockford of LifeAnt.com takes the view that Life Insurance, Whole Life and Term Life should be easily accessible to on-line shoppers. Increasingly, the future of retail is on-line. The same can be said for higher education. Ditto for insurance.

(Image Courtesy of Wiki Commons)

For example, in regard to automobile insurance, these days it is possible that you can contact you insurance provide over your iPhone after an accident, while also filing a report, filling out forms and providing photographs of the incident. Postmodern technology continues to disrupt countless industries, and this is sure to continue in the coming decades. Car insurance rates will probably be impacted by the “rise of the machines,” as Artificial Intelligence, robotics and LIDAR enable cars on America’s, and the world’s) highways to communicate with each other through enhanced technology. Already the technology exists for rearview cameras, and the means to help your car center itself in your lane. Staying in your lane is a part of an “unwritten social contract” we have in society. Technology will help you stay the course as you drive.

Already there are breathalyzers that will prevent your teenager from starting the car if they’ve had too much to drink. These are all terrific developments, considering how many Americans die on our roads each year. That said, the idea of cars without pedals or steering wheels remains science fiction, since AI-piloted cars can’t seem to differentiate between a plastic bag blowing in the wind from a cinderblock in the middle of the road. Cars with autonomous features will be in vogue, but that’s about as far as it will go.

Regardless of the way technology is used as a medium to better facilitate communication between insurance stakeholders, the fact remains that we need insurance today in 2018 perhaps more than ever before. The world is filled with every kind of risk imaginable, from tsunamis to plane crashes to Ebola. Increasingly, we feel unsafe when we read about (or live through) the Asian Tsunami of 2004, Hurricanes Katrina, Rita and Sandy, or school shootings and even church shootings.

(Image Courtesy of Wiki Commons)

If you’re asking  yourself, “Do I need insurance,” consider that no less a monetary authority than Forbes published this excellent article by Kristin O’Keeffe Merrick. It begins by saying, “Life insurance is not sexy. It’s not fun to talk about and it’s definitely not a process anyone enjoys. However, much like death and taxes, buying life insurance is an essential part of life and a crucial element of sound financial planning. Most everyone is aware that they need life insurance but, from my experience, most people procrastinate until there is an important life event that pushes them to buy it.”

Truer words were never spoken. Life is dangerous. Standing up at bat in Major League Baseball is dangerous. Playing in the NFL is dangerous – as the plethora of concussion-related debilitating injuries has shown us over the past five decades. Military training can be dangerous. Helicopters are dangerous. Trains – which are far more automated than automobiles – still crash in a sobering reminder that Artificial Intelligence is not a cure-all for the transportation industry.

The ancient religious texts of Western Civilization tell us that the prudent see danger and take refuge, while those who are unwise continue without regard to their own destruction. Tomorrow is not promised to any of us. For those who may or may not know how dangerous the world is construction can be, consider the use of ordinary tools of the various trades such as welding torches (which can be hotter than the Sun), circular saws, bandsaws, nail guns and grinders. Construction workers use these tools every single day all around the world as they seek to build a better future. That future often rests upon the bedrock of insurance. Yes, we need to life lives based on power, self-control, a sound mind and love – as opposed to fear. That said, a man or woman without any fear is a fool.