I don’t think you can predict risk well enough for that to come true. No matter the predictive power, real life still carries probabilistic nature. We can assign 0.0001 probability to somebody’s house burning down, but in real life it either will, or will not.
They can then choose to skip insurance, and carry a very small risk of loosing a lot of money. Or buy insurance, and carry a very high probability of wasting much smaller amount of money.
> I don’t think you can predict risk well enough for that to come true.
Which doesn't change that that is the ideal goal that GP is suggesting, right?
> No matter the predictive power, real life still carries probabilistic nature. We can assign 0.0001 probability to somebody’s house burning down, but in real life it either will, or will not.
The question was not whether the goal is reachable. The question was whether the goal is actually a good idea. And in order to evaluate that, you have to consider the consequences of the hypothetical case that it is reachable.
> They can then choose to skip insurance, and carry a very small risk of loosing a lot of money. Or buy insurance, and carry a very high probability of wasting much smaller amount of money.
What do probabilities matter to the outcome here? If a hypothetical insurance company managed to achieve the ideal goal with regards to fire insurance, in that they made the insurance as individual as (logically) possible, that would by definition mean that they would charge a premium only from exactly those people whose houses would in fact burn down lateron, and then pay them back when it does indeed burn down. Not insuring yourself gets you exactly the same end result that you would get in that hypothetical world: If your house does not burn down, you don't pay anything and you don't get anything back, and if your house does burn down, you pay/save massive insurance premiums that you later get paid back/have in your savings account. Or rather, you don't, in the latter case, because you can't afford it. So, if you think that that is a goal to strive for, why not realize it for yourself now?
> The question was not whether the goal is reachable. The question was whether the goal is actually a good idea. And in order to evaluate that, you have to consider the consequences of the hypothetical case that it is reachable.
So: yes, it would be ideal if we could predict all traffic collisions and all home fires. And indeed if that were true, insurance wouldn't exist. But that's not a very enlightening scenario.
> If a hypothetical insurance company managed to achieve the ideal goal with regards to fire insurance, in that they made the insurance as individual as (logically) possible, that would by definition mean that they would charge a premium only from exactly those people whose houses would in fact burn down lateron, and then pay them back when it does indeed burn down. Not insuring yourself gets you exactly the same end result that you would get in that hypothetical world: If your house does not burn down, you don't pay anything and you don't get anything back, and if your house does burn down, you pay/save massive insurance premiums that you later get paid back/have in your savings account.
Indeed, but that's because the insurance company can accurately predict what will cause house fires. And people could use that prediction: if taking up welding means my insurance premium goes from 0 to 300k because I'm definitely going to burn my house down if I take up welding, I can use that information to make an informed decision about whether to take up welding.
> So, if you think that that is a goal to strive for, why not realize it for yourself now?
How? Where can I get a quote, now, on whether a given hobby/lifestyle change is going to lead to me burning down my house?
They can then choose to skip insurance, and carry a very small risk of loosing a lot of money. Or buy insurance, and carry a very high probability of wasting much smaller amount of money.