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.

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About paxus

a funologist, memeticist and revolutionary. Can be found in the vanity bin of Wikipedia and in locations of imminent calamity. buckle up, there is going to be some rough sledding.

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

  1. Red says :

    Interesting post. Most forms of Insurance are IMO rip-offs.

    A question — how will the individual mandate part of Obamacare, which mandates fines on those who do not purchase health insurance, affect Twinoaks? Does Twinoaks plan to purchase insurance for everyone, or can TO’ers qualify for Medicaid?

    • paxus says :

      Dearest Red:

      The short answer is i do not know. I assume we will have to pay mandated health insurance costs, but i could be wrong. We certainly have people who have qualified for Medicaid.

      Paxus in Arnhem
      7 Begging 2012

      • GPaul (of Acorn Community) says :

        Most Twin Oaks members make well under 133% of poverty and thus will qualify for Medicaid. Some members with unusual personal financial situations will not and will be required to purchase health insurance. Over at Acorn we’re thinking of getting all the FEC folks who will need to buy insurance together and trying to get a group plan.

  2. julie blimeycharlie says :

    And over here in the UK we have National Insurance, an ideal in collective cover that will not last much longer under our government as it sells off our National Health Service to the profiteers. We’re fighting back – Keep Our NHS Public – Gateshead is my own fb page. The problem is I suppose collectivism has be invested in by individuals coming together, like Beach Hill, Acorn & TO & doing the hard graft of working things out. Assume the government will act like a admin for your collective and you’ll wake up & find they’re all business managers with share options.

    • paxus says :

      i just spend a week with an old friend who had numerous horror stories about the UK health system, which seemed far more obsessed with minimizing costs than providing real care.

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