One of the more liberating things I did a couple of years ago was cancel a lot of my insurance.
Not the sensible stuff, like cars and houses and contents, but all the other stuff that I got talked into one fateful day when the man from the bank came around having been put in touch with me by another man from the bank, who absolutely insisted I need a vast array of cover, just in case.
Of course, it was entirely my fault. Although they made persuasive arguments, they at no point had a gun to my head as I signed up for what amounted to thousands of dollars a year in premiums, for a gargantuan amount of coverage ticking off just about every conceivable circumstance.
Insurance is about risk, which is why I don’t blame the Productivity Commission for their latest idea of having some sort of redundancy insurance attached to our working lives that would appear to have some sort of government connection.
Apart from anything else, if the Commission didn’t come up with ideas someone would ask why we have a commission.
Now the first alarm bell is obviously the government part. My simple operating theory in life, is the less government we have in our lives the better. Government clutters life up, its inefficient and costly and operates on averages not specific circumstances.
ACC is a classic example; nice idea, but hopelessly inflexible not to mention open to rort, and we have no choice.
KiwiSaver is another. Yes, a good mechanism a lot have opted into, but one, given government involvement that is forever being messed with against all the basic advice. Set it up, save and leave it alone.
The Commission’s argument around redundancy cover is you don’t panic when you’re laid off and as a result you make a better job choice and therefore increase the productivity of the country.
It’s not illogical, but it can’t be proved.
Firstly, nowhere near as many people get laid off these days. We are in an environment of extremely low unemployment. The days of mass redundancy are largely over.
And the mass redundancy is you remember often involved singular industries in small towns, and what we know about small towns through benefit stats is that if there are no jobs and people mainly don’t move, so you can have all the cover you want. It will run out eventually.
Skills is another employment problem. Those laid off or without work fall into three main categories: the aforementioned geographic issues, skills, i.e. what can you do that the economy wants, and attitude, in other words, they are on job seeker, which, need we remind you is at record levels, and they’re on it because they don’t want to work. Redundancy cover is of little use to the lazy.
And that’s before you get to the simple fact you can of course cover yourself for income loss and have been able to forever. We don’t need a government or commission doing the job for us.
And then the cost. I have done the cost and the cost isn’t worth it. It's money where the chances of you ever needing it are very low.
Which is why I cancelled all of mine. I could get sick, I might get fired, I might get a lot of stuff, but it’s the risk I am taking and more than happy to do so, and in the ensuing period saving a small fortune, without the government having any part of it.