Insurance is like the umbrella we remember to carry with us in good weather but forget when it is raining.
The towers in the distance are the insurance district of the City. You are paying.
Insurance companies are old and this makes them seem solid. They present themselves as conservative and cautious but are anything but under the skin.
Insurance is seen as sensible thing to do but the very rich seldom buy insurance.
Insurance companies and 'names' seek a risk free return by trading the risks they hold. Generally this works but it can go spectacularly wrong.
Many of us assume that if a company promises to pay us £100,000 in a certain event then that company must have reserves of this magnitude.
Insurance is a game of probability. It can only protect you against events that are in line with probability. If ten houses are normally destroyed in a year then the company will keep funds available for eleven. This is all very well until a real disaster occurs that destroys one hundred homes. What then?
Maybe there will be reinsurance arrangements with other companies that obliges them to help if they cannot pay. This helps if the crisis is national in nature but not if if is global. What if all of the companies are in trouble at the same time?
Reinsurance contracts (companies insuring one another) practically guarantee a major crisis at some point.
Company A promises to pay out. If they cannot then company B will pay company A. If company B cannot pay then company C will fill the gap.
In other words.. either no company goes belly up or they all do.
The good news.
The good news is that we can create our own insurance company! It will be more more solvent than the one we are paying premiums to right now. Furthermore, if we never need to claim we will receive our money back!
Simply create an investment fund (nice and liquid with low risk) and draw upon it if needed. If not- the money is yours to keep.
This avoids all the form filling and insurance premium tax that 'normal' people have to bother with.
Poor people buy insurance. Rich people self insure. Rich is better.