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> All insurers have to do is to pool risk and diversify across geography. Not all insurers are nation-wide.
by Mikeb85 8y ago
> All insurers have to do is to pool risk and diversify across geography.
Not all insurers are nation-wide.
- PeterisP 8y agoNot a problem, that's why the very, very large business of reinsurance exists. You don't have to be nationwide to effectively pool risk and diversify across many industries and nations.
- Mikeb85 8y agoBut someone operating solely in places without fire risk could easily undercut the larger insurers, driving rates down in that area. It's good and all to spread out the risk, but it's better not to take on risk. So in the end, those living in risk-factor areas will pay for it one way or another.