Rural System's

The Insurance Group

The comments of Donna Jo Shaffer, November, 2004, have been helpful

Insurance is a means for a community to reduce the financial devastation caused to any one member due to harmful events that all face. In its most simplistic form, insurance is a social contract that allows the losses of one to be shared among the many. The key concept is that the group (not the individual members) assumes the risk. The contract is not one that each member makes to every other member but one that each member makes with the group. The law now governs this contract, and this actually simplifies the system and ultimately the requirements of the individual community members.

Of course the group must not only recoup the money paid out but must also be sustained by their efforts. The 3 most common ways of achieving financial sustenance are by

  1. charging members a premium for the service (resulting in each individual paying more than in the original social contract,)
  2. investing the money taken in (resulting in each individual paying less) and
  3. using lapsed policies of rented insurance (e.g., a term life policy that someone pays on for 5 years and then discontinues)

A profitable insurance group can reduce the cost to each member of the society below that of the original social contract. This accomplishes:

  1. more members of the society can afford insurance (and therefore withstand the financial hardship presented by a given risk). This increases the society's resilience and thus it's ability to thrive
  2. more members can afford to offset other potential risks - increasing the general financial wealth of the community by protecting its assets.

A core requirement is that there be an ethical insurance group. Without ethics the entire system breaks down. With ethics, the system thrives, grows, and strengthens and creates opportunities for those who would not otherwise have them. It allows a sustained response by groups of people to an unending known set of diverse challenges and stresses. Rural people know these stresses, only they do not know the timing or the amount or the individuals or families that will confront them. Insurance is one way to help sustain rural communities, their people, and their progressive management of their lands.

The needs for all types of insurance by people within the rural community are abundant. We believe that by a diverse approach to these many needs, by membership incentives, by awareness that some gains are devoted to Rural System success, and that new ways for reducing costs are offered, The Group can flourish and have significant impact on the successes of Rural System. It's objective is improving financial and risk-taking conditions for rural people.

The Group over time writes about and develops the concept that investing and holding in insurance is a valid positive land management approach. Failing to have insurance makes families of people in crisis or after a death to break land use plans, to exploit land, to "clearcut" for apparently-necessary short-term financial needs. Insurance gives them time, some perspective, and reduces the needs for such actions. When widely owned and encouraged by the community, the advantages go to the group as well as to the individuals.

The key concepts...

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Last revision: November 23, 2004