Gambling With Insurance

Let us ponder the concept of insurance.

The way I figure it, humans long ago figured out life isn’t fair. A guy spends a whole season cultivating his crop, and then it gets washed away by a flood just before harvest time. Lightning strikes a thatched roof and a family’s home burns to cinders — but the house across the lane, made of exactly the same stuff, is untouched.

After a few millennia of this kind of thing, somebody came up with an idea for easing the random cruelties of fate. Maybe this person addressed a council of tribal elders, or maybe he went door to door explaining his plan. “We don’t know where lightning will strike next,” he may have said, “but if everybody puts one guilder in this strongbox, we’ll have enough money to build a new house for the one who gets hit. Just think, it could be you! Wanta buy in?”


I found a “history of insurance” on Wikipedia. Sparsely referenced, but reading it, I see the beginnings of burial policies, survivor benefits, and fire insurance. Plans to compensate for cargo lost in shipping appear to have arisen centuries ago, before the time of Christ. Which makes sense, I guess. Water transport is one of the oldest industries, and it’s inherently risky.

For the customer, insurance is like gambling in reverse. You ante up your premium, and you “win” by losing. Human nature being what it is, this leads to weirdness.

In conventional gambling, you play to win. You buy a lottery ticket, or put your chips down and spin the wheel, hoping your number will come up. And who knows? It just might, though the odds are overwhelmingly against it. Some of us are willing to bet money (in some cases, way more than we can afford) on that ghost of a chance. Because we are dreamers at heart. A gambler believes in the pot of gold at the end of the rainbow. And even if we don’t win, it’s fun to take a chance and spend those moments visualizing success.

It’s not so much fun to bet on something you hope won’t happen.

To collect on an insurance policy, you must suffer misfortune. Your house gets blown away; you wreck your car; your kid gets meningitis and spends a month in the hospital. These are things you don’t want to think about, and if they happen, you know the cash payoff won’t fully replace what you’ve lost. In reverse gambling, there’s no way to really win. Either something bad happens, and it’s less bad than it might have been without insurance; or nothing bad happens, and you’ve paid all those premiums to no purpose.

Those of us who are born worriers, who have assets to protect, may still feel that insurance is a good investment. A small price to pay for peace of mind.

This works okay if the ante isn’t too high. You can pay it, file your policy in a safe place, and get on with your life.

If the price of insurance starts to interfere with other needs, peace of mind is hard to come by. One, you have to pinch pennies and worry about money. Two, whenever there’s a budget crunch, you start to wonder if you really need that insurance policy. Which forces you to think again of all the things that might go wrong.

You can reach a point, I think, where you’re so invested in fearful possibilities that you don’t have the resources, or the spirit, to work on making things go well. I think a great many Americans are at that point now. Maybe that’s why our national problems seem so insurmountable.

Maybe we all need to spend a week in Vegas and learn to dream again.