Insurance is a relic


Insurance is available to provide protection against all sorts of unpleasant contingencies.  If one has property one can obtain insurance against it being damaged, destroyed, or stolen.  One can get insurance to defray the costs of illness or even death.  The forms of insurance that are available are many and varied, and much of modern business would be difficult to carry on if it were not for insurance.  It is, of course, a feature of traditional economies.

In a Copiosis economy, there is no insurance at all, of any kind, for anybody.  This is because money cannot be transferred from one account to another.  Money comes into existence in one’s account when earned and ceases to exist when spent.  Therefore, one could not pay premiums and one could not collect money from a policy.  Does this mean that people are defenseless against disaster?  How does one mitigate the consequences of unfortunate events?

Let’s consider life insurance first.  One buys life insurance in a traditional economy in order to cover the cost of a funeral and provide for one’s dependents in the event of one’s death.  In a Copiosis economy, one’s dependents will be just fine so long as material possessions are concerned.  They will be given food, clothing, shelter/housing, medical care, and education without having to pay for it because those who gave them these things would be paid for doing so, whoever they are.  Though no one is obligated to give Necessities to them, they will be paid for such giving, which is enough to see that your kin will have the Necessities.  Also, if one’s dependents have earned money, they will not need to spend any of that money if they don’t want to.  Therefore one doesn’t need life insurance.

What about medical insurance?  People will still get sick and become injured, but medical care is one of the necessities of life, and those who practice medicine will be paid for doing so.  Thus, one needs no medical insurance either:  Medical treatment doesn’t cost money in a Copiosis economy.

But what about insuring property?  If the property is a necessity, one gets it without paying.  If the property is Capital Goods, one gets those without paying also.  All that’s left is luxuries.  If one doesn’t want one’s luxuries destroyed one will have to be careful with them.  Protecting one’s luxuries is up to the owner, of course, but providing places of safekeeping for valuable objects is a beneficial service for those who own very valuable luxuries, so one would be paid for providing such places.  Therefore, the property owner can store that jewelry or that painting in a vault and pay a rental.  Fortunately, theft in a Copiosis economy is quite rare so that is of small concern.  Finally, the loss of luxuries, though regrettable, is hardly going to damage the economy or result in harm to others.

Someone recently asked a question which merited clarifying some things.

When one buys a luxury item, that transaction doesn’t happen like it does today. Today, when someone buys something, the price they pay covers the expense (the cost) of things used to make that thing, including the cost of labor. But in Copiosis, NBR doesn’t pay for costs because there are no costs. Giving up NBR for a luxury “unlocks” the opportunity to own the luxury in question. Inputs contributing to creating that luxury get provided by those who own them at no cost to anyone.

Once someone consumes that luxury, everyone who provided materials or supplies that went into making the luxury starts getting NBR. Those NBR payments continue so long as the person consuming the luxury keeps benefiting from it.

If a luxury house, for example burns down, people can’t live in it, meaning, the house isn’t being consumed and producing benefit. So all the people who contributed to the house construction stop getting NBR for that house. Once rebuilt and occupied, NBR flows resume, presuming of course the same people who offered supplies offered more supplies for the rebuild.

What about the various kinds of business insurance?  Those policies are insurance against damage or destruction of Capital Goods such as buildings, equipment, or products.  Again, we note that NBR doesn’t buy such things, so there would be no point in a policy which gave a person money for their loss.

The absence of insurance eliminates an entire category of the traditional economy’s crime from Copiosis economies.  The resources which are devoted to the insurance industry in a traditional economy are devoted to production in a Copiosis economy.  Much more attention is paid to preventing loss rather than to recovering money to compensate for loss.  The lawsuits which today are a byproduct of insurance are completely absent in a Copiosis economy.

2 thoughts on “Insurance is a relic

  1. Only a basic level of housing would not need insurance, right?

    But if someone wants to splurge and have a McMansion built that obviously qualifies as luxury housing above that basic level, what do they do if it burns down because of a fire?

    Shouldn’t there be luxury insurance they can ‘buy’ with NBR? Or rather, shouldn’t nothing be stopping such policies from existing if there is a demand for them? An individual can start an insurance company and pool NBR ‘premiums’. They can even use that NBR to purchase capital goods like affordable housing for others to use, using the ‘rent’ revenues into the fund to shore it up even further. Then when a ‘policyholder’ files a claim they need to meet, they have the NBR to make good on that for them.

    NBR for the person who established the insurance fund would be calculated as normal, with less going his/her way if there is (for example) poor actuarial planning or inadequate reserves or bad customer service, etc.

    1. Hi Ho- Tep,
      Interesting name.

      There’s no insurance at all in Copiosis because there is no need to pay anyone to get them to do something, nor does that doing cost anyone anything. So it doesn’t matter if fire destroys necessity housing or a luxury house. In both cases, people will want to restore those homes, or build new ones for the owners at no cost to the owners, because when they do, everyone contributing to the construction receives NBR for that net benefit. BTW, any fire Marshall or other investigator who discovers why the fire happened, and creates a way to prevent that from happening in the future also gets rewarded NBR. So there’s no need for any kind of “insurance”. Insurance is necessary when people live beyond their means, the things they own are owned on installment plans, or are other wise so expensive cost-wise that replacing them if they get destroyed or lost somehow would be near impossible for the owner to afford out of his or her pocket. That is never the case in Copiosis because nothing costs anything.

      So that brings up some interesting questions about someone who would start an insurance company:
      Why would someone need to create insurance in an economy where insurance is unnecessary?
      Why would people need to pay premiums? There’s no value to doing that.

      NBR can’t be used to purchase capital goods. Capital goods are provided like necessities: to everyone at no cost. The only thing NBR is good for is consuming luxuries.

      So there’s no need for a person to have insurance. Anything that gets damaged, lost or destroyed is restored by people who are good at that, who also want NBR so they can use it to consume luxuries. Those who restore damaged lost or destroyed property would get NBR when they make other people’s lives better off. And wouldn’t you say that a person who replaces someone’s property destroyed by a fire is making that owner better off? We would.

      There’s no need for insurance in Copiosis.

      Now it seems you know a lot about insurance. We’re curious: are you asking your question because you work in insurance and you’re wondering what you would do in a Copiosis economy?

      Whatever your answer, thanks for asking your question!

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