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If an insurance company underestimates tail risk then it may not be solvent when it's time for you to make a claim. Not sure if this is what was meant, but a p
by travisoneill1 8y ago
If an insurance company underestimates tail risk then it may not be solvent when it's time for you to make a claim. Not sure if this is what was meant, but a policy holder always assumes some risk even with caps.
- Spivak 8y agoUnless the insurance industry is insolvent you don't really have to worry about that. Any company you're buying insurance from has reinsurance against abnormally high payouts. This makes the risk effectively zero since if the 'turtles all the way down' system can't pay out then we're probably in a state of national emergency.