Or perfect pricing. When insurance pricing is perfect, it’s never worth it.
“It appears you’re slipping on ice and about to hit a tree with your automobile, to continue your insurance, please deposit $27k within the next 6 seconds”
The basic bargain of insurance is supposed to be: the insured buys it before they foresee needing it, and the insurance company keeps premiums level. If either side defects from this protocol, things fall apart.
No the basic bargain of insurance is a community paying their surplus into a pool that pays out for random unfortunate events that are uncorrelated and could happen to any member of the community.
Adversarial for profit insurance does not make sense as it creates perverse incentives.
