Peter Lohmann argues insurance companies perform essential functions beyond collecting premiums: claim adjudication, fraud detection, fund management, and legal handling. He compares them to grocery stores, specialized providers offering efficiency and expertise. Loss ratios of 40-50% reflect real operational costs, not predatory margins.
the function of the insurance company is way more than just collecting premiums and paying out claims. They have to adjudicate those claims. They have to deal with fraud. They have to protect the money and presumably invest it. They have to administer the plan and people paying and people— what happens if someone doesn't pay their premium? And what happens if the company gets sued? What happens if someone takes their case all the way up to state Supreme Court or whatever? 'Cause they feel like they didn't get their fair share of what they're owed. I mean, there's a million and we talked about like the loss ratio, the money that the other side of that loss ratio, which you said is like 40 to 50%, it costs that company to run that, run the insurance company, like that's real cost. And so, you know, I, I feel like in some of your framing of your LinkedIn posts, you make it sound like insurance companies is like a scam. And I just don't buy that framing. I'm not saying that there's not an interesting alternative, and I'm excited to talk about those details, but what these insurance companies are doing is not nefarious. It's not unfair. It's just what would make sense. It's just like in the same way that like I could go out and grow all my own food, 100%, I could do that, but it's a lot easier to just go to the grocery store cuz they kind of specialize in doing that and they have a wide variety and presumably anytime I need food I can go there and they have it.
