X-Message-Number: 2976 Date: 11 Aug 94 00:43:30 EDT From: Mike Darwin <> Subject: CRYONICS insurance Since I was the culprit who started the insurance debate by putting Marty onto it, I'd like to risk a stern thrashing by putting in a few comments on the messages posted regarding this topic so far. Keith Lynch says he doesn't see why dues should depend on age. Well, that depends on how dues are defined. If we are talking about paying for services *as they are rendered* such as a magazine subscription, I agree. But Emergency Responsibility Fees (a part of so-called dues) are not services as they are rendered? Why not? Simple. If you are age 20 you have relatively little risk of needing Tanya, or Mike, or whoever, to fly out to your bedside with a kit and kaboodle of equipment. In fact, you have almost no risk at all, and if you do die it is most likely to be as a result of sudden death (accident, homicode, etc.) rather than a terminal illness in which case you still don't need most of the stuff! . On the other hand, if you are 80 and faced with inoperable cancer you have an almost certain need of these very expensive services and you will use them soon. The 20-year-old however, is charged exactly the same amount to make these costly services available as is the 80 year old. This despite the fact that the 20-year-old will likely be paying for those services for 56 more years! Do you know how much money that adds up to when you take into consideration a reasonable rate of compounding and return on the principal?! In fact, what happens is that (historically) a large fraction of the people being cryopreserved are last minute cases. People who *prudently* (from an economic standpoint) paid 1-year or less of dues and then used the readiness service which a bunch of "dumb" middle aged and young people payed for! This isn't *fair* and more than one cryonicist has bitterly complained about it. On the other side of the coin the following things can be pointed out: 1) Freezing last minute cases does benefit the young people paying for readiness by providing experience, experimental subjects (each operation has experimental aspects to it and will until we have suspended animation) and so on. 2) It enriches the organization by providing cash flow for labor and by building up the Patient Care Fund. 3) It provides increased PR benefit in that it swells the ranks of the chosen frozen. Still, these are less tangible things and a number of people feel they aren't fair. Steve Bridge's points about insurance are well taken, *now.* But I believe they are a mistaken strategy for the long run. Sooner or later cryonics will be big enough to justify self insurance and it will be foolish not to do so when the time comes. Granted, it seems the time isn't now. But it may well come. Why? Because insurance companies which are well run do make a lot of money. And if you think I'm wrong (AIDS or not) you need wake up call. If you want the specifics, ask for the annual reports of even small, well run insurance companies. Better still, contact the College of Life Insurance in New York City 800 366-6100; they produce an excellent annual report on the life insurance industry, and it free. (It's really a small book!) Also, look at the insurance rates from companies that genuinely minimize the profit taking like the Fraternal Order of Foresters or some mutual companies. The rates are a lot lower. And if you doubt me still, go to Indianapolis, the insurance capital of the midwest, and walk around downtown and see who has all the plush towers dominating the skyline. Dad, those weren't put up by poor orphans scaping out a few peenies on 100K. Whole life insurance is a *terrible* investment. Terrible. In fact its so bad I'm amazed its even sold! And what is more every reasonable analysis of it by organizations from Consumer's Union to you name it has concluded so. And as to the aruments Steve makes about the extra administrative load, I just don't agree. Steve's arguments would make sense if cryonics organizations didn't already have burdensome administrative overhead. But they do. And in fact a lot of it is *because* they have to deal with insurance companies. In fact, much of the administrative overhead cryonics organizations engage in *duplicates* rather than complemenmts insurance overhead. Leaving questions of effeciency aside, look at Alcor as an example. They have at least four full time administrative people to serve fewer than 400 members. Much of that adnministration such as billing, internal accounting, member records, legal expense, etc. overlaps with the ind of administration the insurance company does on the *same clients*. Look, for one thing we are are paying for *two* sets of salemen. We've already sold the insurance for the company in that we've already sold the need for it and we already have to have intensive contact with the client, counseling etc. The client then turns around and pays for that again when he buys insurance: keep in mind that not only do these outfits make enough money for fancy offices and hefty profits, they pay salespeople a living wage too! Also, insurance companies have been singularly unresponsive to cryonics by failing to accomodate us on basic things like verifying that a policy is in force without having to go through bizzare, inconvient and costly gyrations about transfer of ownership or irrevocable benificiary, etc. This has already resulted in a couple of costly hits to Alcor (where they didn't get paid for doing a case). I will also predict that there will be (as cryonis grows) increasing instances of no-pays due to both the insurance company thinking they can get away with it (in some cases) and due to screw ups between the company, the client and/or the cryonics organization. The system as it stands is just too complex, too much of the money goes to to the insurer, and on and on and on. It's all very ineffecient and cumbersome. Finally, we will in my opinion ultimately self insure for two other reasons: a) remote standby is a pressing issue which can really only be addressed by insurance (like health insurance) which is geared specficically to the need at hand (and in my opinion conventional insurance companies won't touch this until after we show it can be done), and b) it will greatly streamline signing up and greatly increase the number of people get through the sign up process. There is no substitute for one-stop shopping. As to the comments about charging more for older people, etc. and how they relate to insurance regulation Steve almost articulated the problem exactly when he said the difference is related to how soon people will die. I am no expert in this area, but as I understand it, in California and most states insurance is described as any contractual arrangement where payments are assessed and spread out among a group of people *on the basis of risk.* Thus, if you live in the ghetto where every other building is being torched you will most assuredly not pay the same rate for fire insurance as you would if you lived in Bel Air. That's what makes it insurance: the charge onthe basis of *risk*. To make standby fees or ER fees *fair* (in the most limited sense) you need to make the rates charged depend upon risk, and that is where the problem (regulatorily) lies. Why is insurance so regulated?* Because it is a delayed feedback indistry and that means it is ripe for fraud. Cryonics organizations take note! Regulation is coming and when it comes it will come big time. Enjoy the freedom while you can. Success will bring loss of control. Big time. Actually, this is only partly true. As industries go, insurance is one of the most unregulated largely due to their (you guessed it) enormous financial clout. Rate This Message: http://www.cryonet.org/cgi-bin/rate.cgi?msg=2976