Insurance Incentives Debate
Discussions center on insurance companies' incentives for risk management, reinsurance, premium adjustments, and whether they actively prevent claims or pass costs to consumers amid systemic risks.
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not an expert but the insurance companies need re-insurance sometimes which adds costs. the worst thing you can do is concentrate your risk. then one event could wipe you out.
Insurance companies don't pick up tabs, they spread out risk, and make a profit in the end if they've calculated the right probability of failure. The insured parties, together, are paying the tab, plus the profit for the insurance company. Only by inspecting a device and its software can an insurance company calculate a reasonable estimate of the risk of breach, and thereby reduce the risk of unprofitably to a tolerable level.
Wouldn't this be a trivial endeavor for the insurance companies?
Insurance companies payout, unlike people with assets structured in a way that protects them. Thus insurance companies are heavily incentivized to reduce the likelihood of having to pay out claims. They are experts at estimating risk and managing risk.
Insurance companies actively work to not-deliver the thing they are paid to deliver.
id be more concerned insurance companies will set rates based on this creating self fulfilling profit.
Insurance isn't a single layer affair. Insurance companies have macro-insurance that covers the entire business in case they misjudged risk. It is legally required in (almost?) all insurance contracts to insure the company offering the insurance. Sometimes those meta-insurers are state agencies, sometimes they are private.
Some perspective: https://www.noahpinion.blog/p/insurance-companies-arent-the-...
These insurance companies are not stupid. The incentives don't align perfectly. They can also just hike the price of the insurance policy and pass along the cost to the consumer. Much less trouble than taking on the mob. If the problem truly is systemic, then your competitors are just as affected as you are, and it's a wash. If you solve the problem, then you also solve it for your competitor.
What you're describing isn't insurance. There's nothing wrong with that and maybe (probably) its better than what the US has today, but if it claims to be insurance than it must be allowing the insurer to consider the risk of each policy it writes.