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re: Does insurance violate the basic laws of economics?
Posted on 3/1/24 at 10:25 am to LSUFanHouston
Posted on 3/1/24 at 10:25 am to LSUFanHouston
quote:
My argument is that the basic theories of economics don't apply here.
The only reason economic theory doesn't apply is regulation and social good policies that distorts actuarial risk profiles at the individual level ...
In reality, your health insurance, your car insurance, all insurance should be priced at the individual risk level ... but it isn't ... partially due to outdated, lazy actuary modeling but mostly due to the reasons I explained above ...
2
Posted on 3/1/24 at 10:31 am to AmishSamurai
Auto Insurance companies have the ability to price on an individual level via telematics, but the majority of the population doesn’t actually want that. They don’t want to be “tracked” when in reality that is the only way to match price to risk
Posted on 3/1/24 at 9:48 pm to AmishSamurai
quote:
n reality, your health insurance, your car insurance, all insurance should be priced at the individual risk leve
Well, by definition:
Insurance involves pooling funds from many insured entities (known as exposures) to pay for the losses that only some insureds may incur.
The company pools clients’ risks to make payments more affordable for the insured.
Sorry, you can't insure at your own risk. But, you could self-insure yourself for your individual risk and predilections.
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