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.
Discussion
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
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.
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
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