It's all about the claim - apart from when it's all about not claiming

I'm a big fan of focusing on claim events with insurance. I have recently written about the importance of focusing on claims stories and telling them to clients. I may even have used the phrase "it's all about the claim". I now want to demonstrate the value insurance policies give without clients claiming - so I must admit that it isn't only about the claim.

Tyler Cowen, an otherwise excellent economist, says in his book that insurance is "unfairly priced" because "The company offering the insurance cover must cover its payouts or repair costs plus the costs of selling the insurance. Since the costs of selling the insurance end up being passed along to the buyers, in the long run the buyer fails to break even. Some buyers will get lucky and come out ahead, but buyers as a whole will lose money."

So wrong, and Mr Cowan, a bit lazy too, from an otherwise penetrating analyst of economic situations whose book is well worth reading.

Cowan appears to mistake the claim payment as the only value a client can receive from an insurance policy. In fact, as most good insurance advisers know this can't be all the value.