Thursday, May 28, 2009

Supernatural Disaster Insurance

Suppose you own the car that's being blown up in this image. You park, run into the convenience store across the street for some batteries, and then some right-wing armored militia blasts everything in its way as it frantically tries to kill Captain America with rocket launchers. No more car. Now what?

In an earlier post, Mark mentioned that the construction industry in the comic book world must account for a large portion of the economy. I bet there is also a lucrative superhero / supernatural disaster insurance industry to deal with these externalities.

How would this insurance industry be set up and organized in the comic book world? Certainly no one is chasing after Superman asking him to pay each time the Daily Planet globe is decapitated from the building. So who is paying? I think there are several options for how a system of insurance in the comic book world could work:

1) A comprehensive, public system. If this government pays for all the damages, then this would effectively be equivalent to having no insurance at all. Instead, the government would levy extremely high taxes from the general public ($18 billion per person per year by Mark's count) and use them to cover all the costs of supernatural disasters.

2) A mixed public/private system. Such a system could be organized any number of ways, but I think two in particular make the most sense. One could be a system similar to obtaining catastrophic insurance (or high-deductible health insurance plans), but in this case it would be paid for by the government. So the government would only pay for certain services, such as for damage caused by superheroes of supervillains to your home, and would only pay "catastrophic" expenses--those that exceed a certain predetermined amount in costs. Everything else would be paid for out-of-pocket by the homeowner. The other way is to establish a base government benefit for certain services (i.e. superhero destruction, supervillain destruction, destruction to your home, destruction to your car, etc.) up to a certain amount. Beyond this base benefit, individuals can elect to purchase supplementary insurance to cover services not included in the package.

3) Market-Based System. This would work exactly like insurance markets work on real Earth. Multiple insurance companies would compete, offer coverage for different services related to superhumans, and charge premiums for that coverage. Likely there would be some significant administrative costs, since most coverage would probably be purchased at the individual level. Furthermore, premiums would be rated by region. That is, if an individual lives in a particularly active area of Metropolis or Keystone City, superhero insurance premiums would be much higher than they would for someone living in Kansas, where there is no action unless Darkseid takes over the entire world (but seriously, how rare is that?)

I will post my views on which system is the best later, but for now I'd love to get reader opinions: Which system makes the most sense in the comic book world? Is insurance necessary at all? A few things to keep in mind:

1) If a public/private system were put into place, should insurance be mandated? If not, then how would they prevent the richer individuals from opting out of the system, thereby increasing average premiums and shrinking the market?
2) Are there any measures that can be taken to minimize the amount of superhero destruction?
3) Should premiums be rated any other way than just by region?
4) What should be included in the base benefit?

50 comments:

Mike@pvl said...

Wasn't this mentioned in the Marvels series way back, the X-Men issue? The narrator supposed that someone would be happy to have their car destroyed since it meant contact with the superhero. Course that was in the golden age, now maybe people would be less delighted

tom veil said...

You know, I think this is why we never notice all the mutants who work in the construction industry. They are hired by construction companies that the insurance firms sub-contract specifically to repair the bizarre sorts of damage that superheroes cause. It's a self-sustaining loop, profitable because the mutant construction workers are so efficient.

Ben said...

I have a question about this.

Don't some insurance companies force victims to seek legal damages to recoup/mitigate payout on insurance claims? I mean, when this happens, often the court turns to the police report and I can tell you, if we don't have a clear cut suspect we don't just pin it on someone. If Flash is too fast for the CCTV camera to show he used your car as a battering ram, it doesn't go on the report.

Secondly, even if they do, now metas are forced to pay out. I'm sure Darkseid isn't showing up for court, but you certainly will be tying up Superman in a decent stint of litigation. And then what if he doesn't show (I know he's an upstanding citizen and all but those criminals don't stop themselves)? You gotta issue on a failure to appear to a summons? No way in hell anyone's executing that warrant.

I'm not exactly sure how that one works but if love if you could clear it up for me.

ajay said...

how would they prevent the richer individuals from opting out of the system, thereby increasing average premiums and shrinking the market?Not sure this applies, because a richer individual would also have more exposure - he's got more stuff that could be damaged or destroyed. So if he opts out, it's reducing the premia but it's also reducing the potential loss, and if the company has got its sums right it should have very little impact on everyone else.
Premium should be based on annual expected loss: insurers tend not to cross-subsidise poorer customers, as a rule.

It's not like health insurance, where everyone, rich or poor, has the same number of bodies, so if you're misguided enough to rely on an insurance-based system then you get the problems of adverse selection and so on.

To be honest, I don't see why it's qualitatively different from any other sort of home & contents or vehicle insurance. The comic book world has (one assumes) a higher frequency of catastrophe, because of the presence of superheroes, so everyone pays slightly higher premia than they do in our world - but there's surely no greater difference than that?

Furthermore, I'm not even sure that overall premia would be higher. Yes, if you live in the comic book world, there is a higher chance of damage by superperson. But surely, because of the existence of supers, there's also a lower chance of damage by natural causes? The supers don't spend all their time fighting each other, they occasionally drop in to stop runaway trains, save crashing airliners and so on.

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Mark said...

While I do agree that superheroes do mitigate a lot of the damage of natural disasters, the reactive nature of a superhero means that they will only be able to be involved in any given natural disaster (tornado, earthquake, etc.) after it is already in progress and enough damage has occurred to notify the hero of the threat. Superheroes are also more likely to focus on saving individuals in a disaster, reducing instances of personal injury but not necessarily property damage.
And to the distinguished anonymous commentator, we are in the process of trying to rename our blog "Eshitmics", but are hopelessly tied up in litigation with another blog which discusses prevailing trends in the fertilizer industry.

Anonymous said...

I think they made a movie about this situation.

It was called, "the Incredibles"

IIRC, someone finally sued the main superhero for damages related to his activities, and won. Then more lawsuits were filed.

The government settled everything, under the condition that the superheroes go underground and stop doing superhero stuff.

Oddly, this led to supervillains also disappearing. At least until the bad guy started his evil plan. And he was quickly followed by another supervillain. Leading to another common superhero quandary.

ajay said...

"the reactive nature of a superhero means that they will only be able to be involved in any given natural disaster (tornado, earthquake, etc.) after it is already in progress"

Fair enough, but they'll still do some good, I would have thought.

What about the main point: that there's no real conceptual difference between insuring against superheroes and insuring against fire? I'm not even sure why you think there should be one.

Erik said...

I think Option three would be the most efficient system, ending up with the lowest overall premiums, but this can't be the system in place. The premiums in super heavy places like Metropolis would be so much higher than everywhere else, that you'd see business's leaving the city en mass.

Some would move to a city like Omaha, which still has a sizable market, but doesn't have a significant super population. Others, who wanted to keep the larger market of Metropolis, would shift as much property as possible outside the city. The Daily Planet could easily have its office building an hour away in the suburbs without effecting its business. Another way of dealing with with the problem would be to spread your property out in the city. Instead of one large skyscraper, have 40 small one story buildings throughout the city, thus minimizing the damage you can sustain at any one time.

Since we aren't seeing these kinds of moves, it's clear the businesses aren't footing the bill for those high premiums. I think a single payer system is most likely in place, with super labor keeping the required taxes within reason.

Greg Sanders said...

Besides regions, certain types of business are more likely to run into problems. Any place ritzy enough to host gatherings of Gotham's elite probably pays through the nose. Given the aforementioned millionaire problem I would guess that mansions also have high premiums as a percentage of value.

I wonder if the FDIC works in comic-verses. Bank robberies seem to be a much higher risk, but I don't know how often they actually succeed after superhero intervention.

KingEdRa said...

What about wealthy benefactors helping to foot the cost of the insurance, or more specifically, the clean-up and replacement of damaged property? One can only assume that companies owned by the likes of Bruce Wayne or Tony Stark are rolling in so much cash that they can afford to do this, perhaps with an economic incentive from the government in the form of tax breaks, etc. (I am assuming that these companies are SO profitable that all the expenses associated with developing armor, weapons, etc., aren't even noticed on the balance sheet, or are at least "hidden" in the budget)

Conversely, certain super-villans (I'm thinking Lex Luthor or Norman Osbourne types) could also use their legitimate business fronts to offset the cost of metahuman damages to the public AND help stir up public sentiment against their nemesis'(this is of course presuming that the public is unaware of the Luthor's/Osbourn's criminal activities).

outlawpoet said...

This suggests that the real reason for the various Registration Acts in the Marvel U might be to tax them at a higher rate for posthuman actions.

MrDave2176 said...

To continue the reasoning the KinEdRa started:

There are two kinds of insurance, the kind that replaces the stuff you lost, and the kind that protects or limits you from liability. I would assume that in addition to the property insurance that most people living in places like New York or Metropolis have there is a "super hero malpractice" insurance that is managed by a trust.

It is probably like the uninsured motorist rider that everyone pays in states with no-fault insurance. This trust is funded by patents on devices signed over by super-heroes and villains that have been found liable of damages. The profits of these patents are held in trust to fund the hi-tech manufacture of replacement buildings and property.

In worlds where magic is prevalent the fund may also be used for the hire of "reality altering" magic to fix damage as well. And while it might not allow you to resurrect your dead wife or kids it might allow you to replace your flattened rancher or fill the mole-man cavern in your back yard.

The increased efficiency of manufacturing (that allows you to build trans-dimensional gateways in a high-rise office building or powered armor in your Malibu beach house) would lower the cost of material goods ($150 for a new car, $10 for an iPhone, 60" TV for $30, free electricity and internet) to the point where it might be economically viable.

doug said...

In that other "golden" age of comics - the 90s - Marvel had a mini-series called Damage Control. It was about the team of people who reimbursed and/or rebuilt damage done to private property by superhero battles. I don't recall who funded Damage Control though.

Vinnie Bartilucci said...

" I don't recall who funded Damage Control though."

I see I was beaten to it. In the latest Damage Control mini, the money was coming from the FEMA superfund. In previous stories it was paid for by insurance policies the buildings (and often the city) held.

Damage Control is a for-profit organization. I posited the existence of a similar organization in the DCU, funded partially by government funds, and partially by patents filed based on the weaponry both criminal and alien salvaged from the battle sites.

I also commented once that in Japan, buildings are built in reverse - the outer facade is hastily put up to keep the skyline looking pretty, and the inside added as quickly possible. This explains how in so many monster movies the building being knocked down appear to be hollow - those ones had yet to be rebuilt from the last fight.

Exirtis said...

Along the lines of what MrDave2176 and doug were saying, the settings that superheroic conflicts exist also typically provide for a degree of increased efficiency/capability to offset cost.

For example, one person with an extremely high strength or telekinetic potential would be able to move around construction materials at a rate and convenience unmatched by modern construction machinery. Think of eliminating all of the trucking and hauling of materials into a city by dint of one superhero's work.

There's also the distinct likelihood that there exist individuals whose powers are relatively worthless for combat, but who would be able to make incredible sums of money by use of their unique talents. Think of a super who could level, grade, and compact 30 miles of ground for the preparation of a highway in days time, versus the months that such would ordinarily take. This equals an incredibl cost reduction and an incredible boost in the speed of construction projects.

Lastly, think of chain-gangs of supervillains who have to perform community service, such as helping repair the damage they created, create infrastructure for future events, and/or design machinery to speed or automate the sort of repair and rebuilding that would be necessary in superpowered conflicts.

Tappet said...

I've had a version of this discussion a few times with a friend of mine who is a much bigger comic book fan than I am (yes, I'm sending him the link). His take on the issue is that, at least in Metropolis, Superman spends a lot of time repairing the damage from his battles. I would imagine that Wayne Industries or (in the Marvel Universe) Stark International would fund various rebuilding enterprises, as well.

Ben said...

ajay,
you might not see any reason to distinguish between meta damage and fire damage, but I'm pretty sure an insurance company would want to. read your policy guide.

tappet,
while i would like to think that superman has time to help the little guy with stuff like that, im pretty sure he has more pressing issues at hand. there is always an emergency somewhere. plus im pretty sure most of that construction is union. check the earlier post about meta construction projects.

LoneSnark said...

I suspect that a lot of time passes between such battles, so the real damage over time is not that severe, not exceeding fire and other destructive eventualities.

However, if we assume the damage is frequent and prevalent, then from the looks of the various cities it is probable that either the city, state, or federal government is insuring against such conflict damage, perhaps merely subsidized as with flood insurance. Such would not be that costly, as most years it would barely register in the federal budget.

But without subsidies, the price of insurance inside Metropolis would be prohibitively expensive, as not even New York City produces enough surplus to rebuild 10% of it every year. As such, people would go without insurance and hope for the best, not rebuilding when the worst comes. Or, if construction does take place, it would be of a damage resistant and cheap sort of construction. After enough time passes, Metropolis would not longer be the wealthy and overpopulated place it started out as, and supervilains would likely move on to another set of victims.

Gitai said...

It would have to be a public system. Otherwise, you wouldn't just pay higher rates in Metropolis; you'd be unable to obtain coverage. Due to all the horrific hurricanes, insurance companies are pulling out of Florida right and left because they just can't take the losses from catastrophic events, even with reinsurance. It's likely that there would be explicit exclusions, as there are for war and terrorism, and that in states with large superhero communities, homeowners would be herded into expensive, insurer of last resort programs run by the state.

Carl said...

The fear is that this would lead to people baiting supervillians as a form of insurance fraud. They explored this in one episode of Batman TAS in which a casino was overinsured and Joker themed, so that the owner could reap the benefits of its inevitable destruction by the Joker.

John said...

I think that it's a public single payer system. It sounds prohibitively expensive. However the absence of traditional criminal activity is a savings that allows the government to pick up the tab.

It may seem strange to keep rebuilding metropolis. But catastrophe has to happen somewhere and it needs high profile targets. So Metropolis is not a liability, it's an asset. So long as the government keeps rebuilding bland, featureless and cost-efficient structures in this one city, the rest of the country gets hit less often.

ajay said...

"you might not see any reason to distinguish between meta damage and fire damage, but I'm pretty sure an insurance company would want to. read your policy guide."

Only a difference of degree. Look, if I lived in the desert, I wouldn't need flood insurance. When I moved next to a river, I'd need to address the issue of floods - now there's an entirely new source of risk for my home and possessions. Yes, my existing fire insurance won't cover it. But there's no reason for me to think that a new source of risk necessitates an entirely new method of insurance: I'll just buy a policy that covers fire and flood at a slightly higher cost.

Similarly, if I live in Fever Creek LA, I won't need meta insurance. If I move to Metropolis, I'll need to buy it - but I can't see a good reason why it shouldn't be offered by exactly the same companies that offer all the other sorts of insurance.

And, actually, for a private citizen it won't be that expensive. Yes, large buildings and landmarks are probably prohibitively expensive to insure.

(In fact, they're probably covered by the government, and I'd imagine that this is the reason why Metropolis still has that nice art-deco look and Gotham still looks like it did in the late Victorian era: in about, say, 1950 or so the government provided a bailout - it promised to cover any prominent (and thus target-worthy) buildings already in existence, but it decided not to create a moral hazard problem by covering new prominent buildings. Every time the Chrysler Building gets knocked about, the Feds rebuild it, but if Trump puts up an eighty-story block that gets melted by Zod, Trump is on his own.)

But how likely is it that a random bloke is going to get his house knocked flat by Juggernaut? Not very. He's far more likely to have it burn down because of a wiring fault.

Kinsman said...

Considering that most superhero-related destruction almost always occurs downtown, it is arguable that the added risk of fireball/laser/spider-web related damage finds a balance in the depreciated real estate and parking prices. The reduction of price would reflect the frequency of such damage.

Therefore, savings are passed on to those who do business downtown, effectively eliminating the need for insurance.

Ogrebear said...

Question - when these places get flattened why is it that the Cities are not built better? i.e. getting rid of Hell's Kitchen or Crime Alley?

Does no one think of civic improvement when rebuilding NYC or Gotham this week?

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Anonymous said...

In that other "golden" age of comics - the 90s - Marvel had a mini-series called Damage Control. It was about the team of people who reimbursed and/or rebuilt damage done to private property by superhero battles. I don't recall who funded Damage Control though.

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andre said...

This suggests that the real reason for the various Registration Acts in the Marvel U might be to tax them at a higher rate for posthuman actions.


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