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Insurance is a scam. Fiat banking in reverse.

Insurance is NOT a scam

Publicly listed “insurance companies” are complete scams; go read Nick Szabo’s essay on this (Shelling out maybe?)

The creation of the company as a legal entity with capability to share risk and reward, occurred in the same timeline as insurance - the ability for a group to protect downside from long-tail risks - and together they unlocked more risk taking, and consequently great exploration and human flourishing

Where insurance stopped serving their core purpose was when they became public and the shareholders, rather than the policy holders, became the focus

Think about it .. no insurance company should EVER be publicly listed; it conflicts with, and undermines the core purpose

.. and so, arrive at the complete clusterfuck that publicly listed insurance companies now are

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Discussion

𝕞𝕪𝕡𝕒𝕥𝕙𝕥𝕠𝕗𝕚𝕣𝕖 5d ago

Insurance can only work in a fiat economy where money is printed to cover claims.

You pay the "loan" in reverse each month and hope they pay you in the end.

btcschellingpt 5d ago 💬 1

No, you don’t understand how insurance works; reserves are built up over time from policy contributions. Some of those are paid out in claims, and some used to acquire re-insurance to hedge the insurer’s risk .. but NONE of the policy contributions should ever be paid as dividends

If you’re curious, have a read on how Lloyds of London started, and in the absence of any other insurer, how they hedged their long tail risk

Insurance will work well in a bitcoin denominated world, premiums will reduce and the need for insurers to “actively manage” their reserves will significantly reduce

𝕞𝕪𝕡𝕒𝕥𝕙𝕥𝕠𝕗𝕚𝕣𝕖 5d ago

I do understand how it works. They either need to take premiums and not pay out all obligations or the cost of insurance is too high to make sense.

Hence why it can only be done in a fiat scam exonomy where they get money from nothing to pay in devalued money.

Do the math ffs.

Zsubmariner 5d ago

I think you are both kind of right. Insurance as we know it is rotten with debt and perverse incentives. But risk pooling is good, in and of itself.

In a post-debt world, I would imagine mutual aid organized on a pure equity basis with digital contracts.

Nothing's perfect, but that would be pretty good and should be scale with minimal moral hazard

btcschellingpt 5d ago

Risk pooling is indeed the desired outcome; holding reserves in Bitcoin makes insurer’s operations considerably simpler

Long way to go to get there

And now, it’s a quagmire of broken incentives that pervert the objective of pooling risk in the first place