Does Bitcoin fix insurance or does insurance fix Bitcoin?
After 28 years as an actuary seeing failures in pensions, health care, insurance, and annuities - the systems people relied on to not outlive their wealth -
MY LIFE’S WORK IS NOW TO DISCOVER THE ANSWER
Bitcoin prices money based on market forces not monetary policy which means every business will be held accountable to a real cost of capital.
Bitcoin fixes insurance because risk will be appropriately priced AND insurance investments will be properly allocated towards economic prosperity (and not zombie ESG public equities).
This will only be true if the coincidence of wants is met at the margins. My guess is that there isn’t nearly the natural market for insurance as we think - this is why the govt was compelled to create it.
I can assure you that nobody knows the true price of risk. No actuary, no insurance CFO - nobody.
(1) Bitcoin and the added accountability will add a ton of innovation into this space. More data collection, open book accounting of investments, etc. Companies will only exist if they can accurately price risk.
(2) Things that have historically been insured (homes, cars, etc.) will have less monetary premium attached to them and therefore won’t be as valuable to an individual/family to insure.
(2a) margins for insurance will be squeezed
(3) Bitcoin becomes the best performing asset for investment … why would people entrust a major pooling agency for insurance? Why not hold your own bitcoin with your savings and prepare for the worst? Going to be a fascinating exploration of trade-offs when people have reason to SAVE again.
Yeah - agree totally. I think we’re both saying that insurance will mostly cease to exist.
What I’m focused on is 1) what will a world without it really look like; 2) what lessons should bitcoiners understand - I think it’s presumptive that mistakes won’t be made and that risk will never be mispriced - but we probably agree that companies that do this will get rekt quickly.
Bitcoiners understand counterparty risk but not the risk of outliving their savings. Satoshi focused us all on banks, correctly. But I think there’s a lot to be learned from how insurers have behaved and how their wreckage will unfold in the next decade.
Maybe insurance is the next affinity scam / shitcoin the next wave of new Bitcoiners will fall for.
Celsius essentially positioned themselves as an insurer. Stablecoins do the same. But there will be a big market for lifetime income among people who didn’t save and didn’t find Bitcoin until it was 2M a coin.
