Insurance Reform

Transparency

   Insurance companies are not transparent regarding their coverage policies. For example, does a typical consumer really know the odds of being protected by their insurance policy?

   For instance, if an insurance company had 1,000 homeowners each paying $1,000 in annual premiums, that would result in a total of $1 million per year. If the average home costs $250,000, that would mean only 3 out of 1,000 households would actually be covered by their policy (after the insurance company takes their cut). Even after considering a longer 50-year period, that's still only 150 homeowners being covered while 850 customers lose out.

   After considering those odds, it may be better if the money was saved instead in a separate bank account to cover any potential damages. For example, if the $1,000 per year in premiums were invested in the stock market for the past 50 years, that amount may actually grow to approximately $1,164,026 with historical averages being considered. That seems better compared to a total loss of money if the annual premiums were paid to the insurance company over the same period.

   The consumer protection agency should require insurance companies to provide greater transparency regarding their chances of coverage, both at an annual and accumulated rate, for their customers.

Forced Participation

   Due to the general nature of insurance policies being essentially pyramid schemes in nature (where there isn't a guarantee that every participant will benefit), it would be immoral for governments to force their citizens to purchase insurance policies for any given reason.
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   For example, governments that require drivers to carry auto insurance or they may lose their driver's license. Or requiring citizens to purchase a health insurance policy or end up paying a hefty fine (e.g., original version of Obamacare in America). Or force citizens to participate in a retirement pension plan (e.g., Social Security).

   As shown in the above example, people may be better off if they saved their money in a separate bank account and invested that money rather than pay insurance companies their annual premiums. However, if governments required their citizens to purchase certain insurance policies (auto, health, pension, etc.), consumers lose their ability to make a choice in the matter and it may end up costing them in the long run.

Territorial Boundaries

   Since some areas of the country may experience a greater number of natural disasters than others (e.g., fires in arid regions, flooding near coastal areas, etc.), it may be better to restrict the payout of insurance claims to be limited within a state's/province's boundaries. Doing so would be more fair to those who live in safer regions than pay for those who live in high-risk areas.

Financial Liability

   It may not be very well known but a common practice for insurance companies is to insure more than what the company is able to pay out in claims. The problem is actually so excessive that the entire insurance industry combined as a whole has insured more than what the entire world has available in money! Which provides a false sense of security for policyholders. Legislation needs to be considered that requires insurance companies to have the necessary funds to cover their policies, and not to exceed their company's capital.