> In general, because the regulatory functions are aware of information asymmetries that could lead to large numbers of people transferring a significant amount

> In general, because the regulatory functions are aware of information asymmetries that could lead to large numbers of people transferring a significant amount of wealth to smaller number of other people. I doubt this is the actual principle upheld. You have just described the role of insurance, as provided over the last 300 years or so, as something regulators want to prevent. You have asymmetrical information and a massive pool of people transferring premiums to a smaller group (the insurance companies themselves). Then, when there is a payout, you have the smaller group transferring massive amounts to yet smaller individuals (the ones who experienced catastrophic loss).