Insurance Reform

Transparency

   Insurance companies are not very transparent regarding their coverage policies. For example, does a typical consumer actually 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.

   It may be better if that money was saved instead in a separate bank account to cover any potential damages. For example, if the $1,000 annual premiums were invested in the stock market for the past 50 years, the amount may grow to approximately $1,164,026, compared to a total loss of money if paid to the insurance company.

   So, after 50 years which is preferable: rely on dismal odds of which there's no guarantee that the insurance company will pay the entire amount, or nearly $1.2 million? The consumer protection agency should require insurance companies to provide greater transparency regarding their chances of coverage, both at an annual and accumulated rate.

Forced Participation

   Due to the general nature of insurance policies being pyramid schemes (where there isn't a guarantee that everyone 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 requiring 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, it may be better if a person saved their money in a separate bank account and invested it than pay insurance companies their annual premiums. However, if governments forced their citizens to purchase various 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 is common practice for insurance companies to insure more than they are able to pay out in claims. The problem is so excessive that the entire insurance industry has insured more than what the 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 the payout of their policies, which is not to exceed their company's capital.