Insurance Is the Ultimate Infrastructure

Snow Storm Atlanta Traffic

The videos and news accounts of the horrible traffic snarls and accidents in Atlanta is a grim reminder of the power of nature. At times it seems like mankind’s ability to mitigate the negative impact is overly limited. Especially when you read that as many as thirteen people died due to the storm, including the traffic fatalities.

A few days ago I posted a blog on about fracking. In that blog I came to the conclusion that fracking might not be as big a problem in North Dakota as the lack of proper infrastructure. Infrastructure can be defined as basic organization or services.

Definition of Infrastructure

Faulty and insufficient pipelines are creating spills and causing too much traffic on roads and railways. Lack of adequate restaurants and stores and housing are forcing the oil field workers to live in “man camps” made of semi trailers and imagination, and to spend hours shopping  . . . instead of minutes.

My blog also concluded that insurance could play a powerful role in the oil field in applying loss control and engineering in a constructive effort to reduce loss without impeding production. As such, insurance could be an important part of the oil field infrastructure.

The situation in Atlanta would be much, much worse if it wasn’t for insurance.  Obviously auto insurance is a necessity that can mitigate the devastation of a chain reaction collision that ultimately involves dozens of automobiles. The resulting bodily injuries can easily run health care costs in the $millions. In those instances where death occurred life insurance can make the loss less traumatic by easing the financial transition.

Lack of Snow Plows in Atlanta

It might seem a far stretch to think of an economy where insurance doesn’t exist, but for me it is quite easy. In the mid-1980s we were in the midst of a very hard market. Political subdivisions and state agencies in North Dakota were struggling to find affordable insurance.

  • The University of North Dakota Medical School, whose graduates supply a large percentage of health care for the state, was closing because it couldn’t find malpractice insurance for the teacher/physicians.
  • The leafy spurge program had shut down and projected losing twenty years in the battle against this noxious weed.
  • The municipal zoos in Bismarck and Wahpeton had both closed.
  • Many senior citizen buses were parked because they couldn’t afford insurance.
  • Hundreds of board positions for cities, counties, schools, and other political subdivisions were going unmanned because they couldn’t purchase director’s and officer’s coverage.
  • Many cities, counties, schools, etc. were facing budgetary problems with their insurance premiums doubling and tripling.

I was asked to talk to an interim committee of the state legislature about insurance cycles. At the end of my discussion they asked what they should do to solve their crisis. I told them to form a self-insurance pool.

Several state officials including the insurance commissioner, the attorney general, and the head of management and budget met with me the next day and challenged me to create such a pool. Less than sixty days later we issued our first insurance policy. Today that pool has over $50 million in assets, works through agents, and has saved the people of North Dakota $millions while solving the pending problems.

Insurance is necessary and life without it would be harsh.

Affordable Care ActA few weeks ago I had lunch with my insurance agent. He had an idea for saving us some money. He reminded me that health insurance has been turned inside out by the Affordable Care Act. He suggested that we have our people buy individual policies and increase their payroll accordingly.

It sounded absurd, but we gave it a try because life without health insurance would be unthinkable. It was nice to find out that we’d dropped our annual expense for health care for our employees by nearly $3,500 per insured person per year.

I have great empathy for the tragedy in Atlanta. It must be rough living where public officials seemingly don’t understand the importance of ice-free roads. However, their plight is one more example that knowledgeable agents combined with robust insurance policies written through financially strong insurers provide infrastructure for our country.

James Holm


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