34 ms·

Woman makes $420k by buying insurance on flights she predicted would get delayed

• nwsm 6y ago
  > The Paper, citing Yangtse Evening Post, said she was able to receive relevant information beforehand that tells her if the flight was going to be delayed or cancelled. Why does the title say she "predicted" they would get delayed?
  • globular-toast 6y ago
    I wonder that same thing. This changes it from really clever to insider trading (ie. fraud).
  • grapeape25 6y ago
    Could be that the relevant information is a good indicator it will be delayed without actually saying it will be delayed. Arguably still a prediction - just one with much better odds than an outside observer.
• perfunctory 6y ago
  > The Paper later found out that many insurance companies have already fixed the loopholes that Li took advantage of to get rich. > The ones they checked with now have a clause that says they will not be responsible for any payout should the insured, at the time of buying, already knows or reasonably deduces that the flight can be delayed anytime. What kind of clause is that?
  • vkou 6y ago
    It's a bit like the clause about how you shouldn't be buying fire insurance for a house that is already in the process of burning down. It's not an unreasonable one.
    • greatpatton 6y ago
      You analogy is incorrect as it would mean that she would buy the insurance when the flight is officially delayed. Here she is making a prediction, which may or may not be correct. It is exactly the same as when you are buying option or contract on the stock market. Here the issue is that the insurance company has a fixed premium which not based on the likelihood of delay. This is completely on the insurance side. Otherwise the stock market will have big issue if you apply the same analogy. This new clause is in effect a blanket one to not pay anything... if you pay for an insurance you have the conviction that the flight might be delayed... otherwise there would be no point to buy it....
      • roenxi 6y ago
        The insurance company isn't a math problem; they are offering an explicitly bad deal. They are offering insurance on the basis that they will make a profit. Making that explicit in the contact is reasonable. If somebody thinks they are making money out of their insurance contract it is probably fraud or very close to.
        • rswail 6y ago
          My understanding is that insurance companies operate on pricing the contracts to cover their potential losses while making profit on investing the insurance premiums.
          • Cogito 6y ago
            Insurance companies, depending on the company and the line of business, will aim to make both an underwriting profit and an investment profit. If it is a particularly high premium line, and especially if there is a lot of competition, it's more likely that the underwriting profit will be kept minimal or even negative, as the investment profit is so much more lucrative. This is common in the car insurance lines of business, for example. For retail insurers there are a lot of moving parts here, and they will often not hold much of the final risk, so can't make money from investment anyway. For example, the retailer (sometimes an underwriting agency) may be underwritten by some bigger insurer. That insurer may have a quota share arrangement with another insurer (I'll take 10% of the risk, you take 90%) with a corresponding premium share. At each level reinsurance is bought, sometimes on the whole portfolio of risks and sometimes on particular classes of risk or specifc policies, and the costs associated with the reinsurance are priced into the retail premium. Additionally, when working in an intermediated market with brokers, there are often credit terms of up to 90 days where no payments are made. Anecdotally, it does seem like some brokers do make a large amount of their money on this float. Adding it all together, there are two main numbers to track from an underwriting profit point of view - your loss ratio (claims incurred / earned premiums, often extended to include projections for future claims and premium for future insured periods) and your combined operating ratio (COR) which includes expenses. There will be a loss ratio at which a line of business becomes profitable, and final premiums are often calculated by taking the expected losses and grossing up by this loss ratio. For individual accounts it might literally be that simple - "over the last 5 years this account has averaged claims of $100,000 a year, we need a 60% loss ratio so the premium should be $166,667." If there are extra reinsurance costs you might add those, and you might also add a loading for large infrequent losses that aren't captured in your underlying loss ratio (and another loading for catastrophes, a level above that). The combined ratio needs to be under 100% to be 'underwriting profitable'. I've seen CORs as high as 105-110%, but typically those portfolios were being very closely monitored/remediated/exited. If there is a strong market the COR is allowed to drift higher, but when the market tightens so does the COR.
  • csunbird 6y ago
    This is extremely ambiguous, the insurance company may refuse to pay any insurer at all based on this clause.
    • close04 6y ago
      This may be treated as "insider knowledge" but I expect the burden is on the insurance company to prove prior knowledge. But "reasonably deduces"... that can be used in any such case where mass payouts are a likely outcome. If I can "reasonably deduce" a payout will be needed than so can the insurance company. Under these conditions accepting my insurance purchase should be seen as the company committing fraud. They accept a payment knowing the customer can never collect.
      • rswail 6y ago
        Note that it's "reasonably deduces" at the time of buying the insurance contract. So it's not like the insurance company can say "you should have cancelled the night before because everyone could see the storm coming".
        • close04 6y ago
          I think I addressed it pretty clearly before. If a regular consumer can "reasonably" deduce (using logic, not some "illegal" insider knowledge) at the time of buying the insurance policy that the flight may be cancelled then the insurance company employing experts and very accurate statistical models can more than reasonably make the same deduction. Now since we agree that both parties deduced the flight will be cancelled but the company still went ahead and took the money for the insurance contract, this can only be fraud. The company took the money under false pretenses since they implicitly know even before the transaction that the claim is null and void under the "reasonable deduction" paragraph.
        • ErikVandeWater 6y ago
          The reason people buy flight insurance is because they reasonably deduce the flight might be cancelled.
  • ashtonkem 6y ago
    One that is extremely narrow in scope. In this case, continual purchasing of insurance on the flights likely to be delayed would be evidence you knew it was going to be delayed.
    • fendy3002 6y ago
      IMO, the problem is how to prove / what is the condition. Without clear condition / clauses, it is possible that they'll deny valid claims by saying that the insured has already know beforehand. Maybe there are more specific information?
  • WhompingWindows 6y ago
    Is there any legal definition/precedent of "reasonably deduces"? Have companies attempted this kind of blockage before?
    • dfxm12 6y ago
      There is a definition. https://www.trans-lex.org/902000/_/standard-of-reasonableness/ https://www.trans-lex.org/902000/_/standard-of-reasonablenes... https://en.wikipedia.org/wiki/Reasonable_person https://en.wikipedia.org/wiki/Reasonable_person That doesn't mean there's no grey area, though. Is it unreasonable to buy tickets and insurance under an assumed identity? Probably, but part of getting your day in court having the ability to suss this out.
  • zoomablemind 6y ago
    I think the main point is about risk distribution. In a normal insurance contract the main risk of an uncertain event (the damage) is assumed by the insurer, while the policy holder's risk is tied to losing the paid premium. When such a contract is made in advance knowledge of likely occurrence of the event, the risk is fully shifted over to the insurer. Thus in absence of shared risk this subverts the contract into an unequivalent monetary transaction, which reasonably amounts to fraud. Similarly, if there's an advanced knowledge from the insurer on almost certain unlikelyhood of the event, then it's defrauding the policy holder of their premium. So the insurers must pay off time to time to maintain the perceived fairness of contracts. Meanwhile doing their best to balance their share of the risk... and most importantly price in the 'administrative overhead'.
  • jopsen 6y ago
    Probably an unnecessary one... Most jurisdictions won't enforce a contract entered in bad faith. I'm no lawyer, but I would guess the hard part is detecting this behavior and/or getting the money back, not so much denying the payments. (Though flight insurances probably don't have much infrastructure for fighting fraud, as there is few ways to do insurance scams)
    • nightcracker 6y ago
      > Most jurisdictions won't enforce a contract entered in bad faith. What? What exactly is bad faith here? How is buying insurance on things you expect to fail any different than, say, buying options on the stock market, or some other form of intelligent betting? You have expectation X, you find a third party that disagrees and has expectation Y, and agree to make a bet on the outcome with odds relative to X:Y. If your assessment of the situation was closer to the truth than the other party, you can stand to make money. The assumptions of the insurance company is that they have superior models and can amortize losses among many people and thus charge only a small margin. They don't always have the best models though, and I really don't see how calling them on it is 'bad faith'.
      • second--shift 6y ago
        > How is buying insurance on things you expect to fail any different than, say, buying options on the stock market, or some other form of intelligent betting? Insurance, unlike options on equity stock or indexes, require an insurable interest. The pricing of insurance assumes that the buyer of insurance would rather not use the insurance policy; the options contract on stock makes no such stipulation. They are a bit similar in practice but both are structured, regulated contracts and are defined differently. This lady did not have an "insurable interest" in the flights she was purchasing insurance on, since she did not actually intend to go on on the flight (she bought the insurance to profit from the insurance). Had she bought an "option" and not "insurance" on the flight, fraud maybe would not be in play. However, expect an "option" to be priced differently.
        • cellar_door 6y ago
• dx034 6y ago
  I don't really understand how she made money. She apparently still bought tickets. If they weren't delayed she refunded the ticket early. But wouldn't otherwise the insurance payout just offset the price of the ticket? Or was there a premium on top of that?
  • xxs 6y ago
    Depends on the insurance, delaying a flight might mean a lot - like missing events/meetings/connecting flights, etc.
    • usrusr 6y ago
      Connecting flights can be a big use case if you can't get the whole itinerary from a single vendor (or if laws/regulations/terms and conditions fail to make the single vendor responsible for missed connections). But in a perfect world you wouldn't place those bets against an insurance company but against the transport service itself (of the upstream leg). "I see your ticket price of 50 and raise another 20 against your punctuality SLA." This would create incentives and would be so much less of a hassle than alternative approaches that somehow try to factor in actual damages.
  • Traster 6y ago
    It's unclear, but it sounds like there's insurance available in China that will simply pay you money if your flight is delayed by a certain amount of time. The amount you get paid is not tied to the cost of the ticket it's simply a feature of the contract, so obviously there's a trade-off there with a profitability = Insurance Payout * Probability of Delay - Flight Cost
    • gambiting 6y ago
      I mean, I'm sure such policy could be arranged elsewhere too as a custom thing, but it's basically gambling at that point. You might as well go to a bookie and place a bet that a flight will or will not be delayed(most bookies would be happy to accept such bet too).
• larodi 6y ago
  She beat the game of insuring flights, what's wrong about it to have police arrest her? She played fair, rules were set by those companies.
  • t0mas88 6y ago
    I guess the part where she used 20 fake identities to hide her tracks is illegal?
    • huffmsa 6y ago
      Yeah, sounds like she broke a few laws RE identity and falsifying information about some of the cancellations. Nothing wrong about finding an informational edge over the insurance companies.
      • nvr219 6y ago
        She got greedy!
    • lucianbr 6y ago
      Ok, fake identities are illegal. But why would she need to hide her tracks? Was there something else illegal in the first place, that would necessitate her using fake identities to hide? What?
      • bryanrasmussen 6y ago
        Well, if I were to do something like this one of the first assumptions I would make is if I use the same identity for each refund they will soon catch on that I have gotten a lot of refunds and shut me down.
      • WJW 6y ago
        You can only get one insurance policy per flight per identity and the maximum profit per policy is limited. So to increase profits you can get more identities and then get more insurance. Kinda how some people have dozens of dropbox accounts to take advantage of the free storage every account gets.
• reqres 6y ago
  Isn't this a legitimate trading strategy in financial circles Contracts like credit default swaps pay out if some organisation fails to meet their (debt) obligations
  • OJFord 6y ago
    Yes, but I'd compare it to - or even say that it is a form of - arbitrage. The payouts on these flights should cause the insurance company - instead of adding terms clauses - to increase the price by recognising some of the same patterns she has, and thus reducing the difference in price (/value) between the 'markets'.
  • gpderetta 6y ago
    Sure, but trading with insider information is illegal in most regulated financial markets.
  • koheripbal 6y ago
    Not in this case because she used fake names to initiate the contracts to avoid detection.
• lpilot 6y ago
  Well, insurance is just gambling with extra steps. Usually, you bet on something bad happening like your house getting burgled or your flight getting delayed, and the insurance company takes you up on that bet. In a very abstract way there's not much difference between this and betting on sports.
  • rjtavares 6y ago
    Financial products can usually be traded for three purposes: speculation (or betting), hedging (or insurance) and arbitrage. The product is the same, the name of the action depends on what the buyer is trying to do.
    • tomp 6y ago
      But "insurance" isn't strictly a financial product (the kind that's traded on exchange). For example, if you buy life insurance, you can't then resell it (equivalently, I cannot buy insurance on your life) because that would cause some pretty unethical incentives.
      • WJW 6y ago
        You as a client may be unable to resell the insurance (for the unethical incentive reason you mentioned), but big bundles of life insurance policies are definitely traded on a secondary market by the insurance companies. This is called "reinsurance" and allows the insurance company to reduce volatility in cashflows, thereby decreasing capital requirements per policy written and this increasing the total amount of policies that can be written.
      • namibj 6y ago
        Actually, it seems like you can do that in Germany.
      • ashtonkem 6y ago
        You can buy life insurance for other people if there’s an insurable interest. You actually used to be able to purchase life insurance on any other people, although you’re correct on why that’s a bad idea. The darkest examples would be companies in high risk work buying life insurance for workers, which reduces the incentives to provide adequate safety equipment.
• paulkre 6y ago
  I wonder how she predicted so accurately which flights would be delayed.
  • readarticle 6y ago
    But instead of getting onto the flights herself, Li was making use of her past travel service work experience to selectively take out insurance on flights that she thought would be delayed. The Paper, citing Yangtse Evening Post, said she was able to receive relevant information beforehand that tells her if the flight was going to be delayed or cancelled. 3rd and 4th paragraphs of the article.
    • wolfgang42 6y ago
      “receive relevant information” doesn’t really adequately answer the question of how.
      • heedlessly3 6y ago
        it's possible she was in talks with a co-worker who gave her insider info
  • netsharc 6y ago
    She probably wasn't super accurate about it, because the article also says she would try to get the tickets refunded if the flight ended up not getting delayed. Maybe the insurers didn't have sophisticated algorithms, and her prediction was something like: For example on Flightradar24, etc, you could see that a particular plane on a particular date maybe flew New York - Austin, then Austin - Boston and then Boston - New York. On the next day it might be the same or a different plane. On the next day you'd just have to see if the NY - Austin flight is delayed, and you could deduce that since the airline usually uses 1 plane to do the 3 above routes, that plane will be delayed for the Austin - Boston and Boston - New York routes...
  • unishark 6y ago
    My guess is she took advantage of times when the airlines hadn't announced the delay yet but had no chance of making it on time. Then occasionally got burned when they switched planes or something and cancelled a different flight instead.
• vmception 6y ago
  -20 social credit
  • jacobush 6y ago
    double plus ungood
• franciscop 6y ago
  > The ones they checked with now have a clause that says they will not be responsible for any payout should the insured, at the time of buying, already knows or reasonably deduces that the flight can be delayed anytime. Wait how is that the solution at all? That seems like might be a lot worse for everyone involved, including innocent insurers. I would expect them to somehow reduce the payout to only the cost of the flights or similar, resulting on a net neutral for the insured.
  • martin-adams 6y ago
    I guess part of the reason people have insurance is to cover other losses, such as hotels and onward flights. Reducing to the cost of the flight might lose a lot of customers.
    • Cthulhu_ 6y ago
      Yup, I've never heard of insurance for just a missed flight, but I have heard of cancellation insurance for the whole journey.
      • webmaven 6y ago
        > Yup, I've never heard of insurance for just a missed flight, but I have heard of cancellation insurance for the whole journey. If you only get insurance for outright cancellation, there is a "donut hole" between that and what the airline will cover in the case of longer delays. BTW, it can be illuminating to read what the slightly more expensive travel insurance packages will cover; things like a helicopter medevac back to civilization, or ransom payments in case of kidnapping.
• ashishb 6y ago
  She got greedy and got caught. I wonder how many more might be doing this.
• ggm 6y ago
  The problem was her access to privileged information about the flights. And, misleading multiple identities. If she'd stuck to hedging and sold a service she probably would have IPO'd by now. The arbitrage function remains useful.
• Pabblo001 6y ago
  And you are seeking side project ideas :)
• pembrook 6y ago
  If the insurance companies were so consistently mis-pricing their contracts, instead of calling the police they should have hired this woman and used her expertise to design dynamic pricing algorithms. The article says the insurance companies have now closed the loopholes she exploited. To me, she deserves every dollar she made for making the insurance market more efficient. I'm sure those errors would have cost these companies much more than $400k over the long run.
  • basilgohar 6y ago
    This is one of the clear evidences that the insurance industry is a dolled-up, glorified gambling industry, and they want to be able to play as a casino, without losing if someone other than the house games the system.
    • yellowstuff 6y ago
      You're right in some particulars, both gambling and insurance let customers enter transactions with an uncertain payoff that favors the house, and both are relatively aggressive legally when customers try to get an edge. But the purpose of healthy gambling is to have fun, and the purpose of insurance is to pay a small amount in most future states of the world to avoid very bad outcomes in some future states of the world. These are both reasonable things to spend money on, but they're very different objectives.
      • MaxBarraclough 6y ago
        Agreed. Insurance will always look somewhat like gambling, by its very definition, but its role is very different. Someone did a better job of estimating odds than an insurance company did. They then defrauded the insurance company, using fake identities, and were discovered and arrested. This doesn't delegitimise the idea of insurance in the slightest. If the person hadn't used false identities, but had still been arrested, that would be a more interesting case (more analogous to legal professional gambling). When false identities are used, it's clearly not above board. I would assume that in such a case, the insurance company could refer to their terms-and-conditions, and then contest their obligation to pay out. I don't imagine it would be a criminal matter though. (Needless to say I'm not a lawyer.)
• mrkramer 6y ago
  How much money she would made when Corona pandemic started when all flights got delayed?!
• freakynit 6y ago
  So the police arrested her. Why wouldn't the police seize insurance companies assets when flights were not delayed? They do exactly same with people, right?
  • mcv 6y ago
    Yeah, but they're big and important, so the system protects them. Not not the case for the woman.
  • rdsubhas 6y ago
    Sorry, please read the article. She was not arrested for normally buying retail insurance like how everyone does. The woman faked different identities (illegal) to not fall under regular insurance quotations, and used insider information (illegal/scam in insurance policies, just how insider info is illegal in stocks). This is akin to someone buying car insurance, faking different identities each time, and plan in advance to crash the car every single time (the insider info part).
    • unethical_ban 6y ago
      I won't argue with the fake identities part, but she didn't force the flights to be delayed. She didn't "crash the car". It would be more like her driving through a known dangerous intersection, following all traffic laws, and still getting t-boned every few days because of low visibility. She didn't "make" the crash happen, she just knew it would.
  • viklove 6y ago
    Because the police only exist to protect assets and asset holders. That's why they were established so don't be surprised when they don't protect and serve the people.
• Hitton 6y ago
  Even though it didn't end up well for her, it's nice example of how non-technical person can "hack" the system. She definitely has hacker mindset.
  • chasing 6y ago
    Grifter mindset, you mean.
• TheOtherHobbes 6y ago
  I recently collected nearly £2500 from an insurance company because a policy had been mis-sold when I bought a house. The policy was sold so the agent could get their commission. There was no credible justification for it. Worse, there was no record showing that I ever signed any paper authorising the charges. When I talked to the investigation department, they said that off the record, between you and me, record keeping is incredibly poor, and my case was only unusual because I'd questioned the payments - and most people don't. My partner is going through something similar, but the paper trail in her case is even more tenuous. The only justification on file for thousands of pounds in payments collected from the 90s onwards is a mortgage application she made a few years ago - and didn't even go ahead with. This is on top of a national Payment Protection Insurance (PPI) scandal which forced insurance companies and banks to return billions of pounds. Somehow this never seems to be labelled criminal fraud. It's always "Mistakes were made..." and no one is ever personally responsible. So honestly, I'm finding it hard to be sympathetic to the poor exploited insurers in situations like this.
  • deleted 6y ago
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  • mettamage 6y ago
    I recognize this as well. I once didn't fill in my Dutch VAT taxes (0 euro's by the way, it was an administrative formality) and I was fined. Another time the tax authorities didn't pay me money back for almost 9 months, and it was only because I found out and they forgot because of some administrative mishap. However, I'm not allowed to fine them. I find it weird, because I'm pretty sure the mistake is similar in behavior and intention. Yet, I have to pay up and they don't.
    • smegger001 6y ago
      ultimately it comes down to because they have more guns and goons than you do.
      • anoncake 6y ago
• javier123454321 6y ago
  Finally a story about a hacker in this forum
• joering2 6y ago
  > The ones they checked with now have a clause that says they will not be responsible for any payout should the insured, at the time of buying, already knows or reasonably deduces that the flight can be delayed anytime. I think if burden is on insurer, then insurance can get away with any payout. They can always claim you knew weather is bad. So after all, insirance career is a big winner here.
• sjapps 6y ago
  I guess this would've been perfectly legal had she not used fake ids? Just like the stock market...
• jiveturkey 6y ago
  too bad this article is so thin. i'd be interested to know how she made a dime. what insurance policies pays you back more than the cost of the travel arrangements themselves, which you are already out of pocket on?
• yodon 6y ago
  This kind of thing goes way back and used to be much easier. Over-booking of flights used to be a huge problem back in the 90's and earlier. You'd get on the plane, someone would be in your seat already, and that's when you found out you didn't get to fly on that flight. Airlines figured out this pissed people off and started counting tickets before letting people onto flights. If they had too many people waiting to board a flight, they would make an announcement and start offering free stuff to people willing to be bumped or take a later flight (this still happens in rare circumstances today but used to happen on most flights for a few years). I remember listening to a gate agent threatening to call the cops on a college age guy who was picking up his third free ticket of the week for accepting being bumped off an Oakland to Las Vegas flight. He'd apparently figured out that that flight was always overbooked (which wouldn't have taken a rocket scientist given the high rate of overbooking at the time), and the only reason he got caught was the same agent kept getting assigned to work the counter for that flight often enough to remember his face. Interestingly, I also flew on a nearly empty flight once during that era. The pilot came on the loud speakers and said "the next time you are wondering why flights are over booked, remember this flight - this plane was booked to 120% capacity (or some other number well over 100%) for this trip."
  • thehappypm 6y ago
    For a flight to have gone from 120% to nearly empty would mean that some large group didn't show up. Maybe an entire tour bus was delayed by a flat tire or something. Statistically speaking, a hundred people simultaneously missing their flight is vanishingly unlikely.
    • deleted 6y ago
      [deleted]
    • Plough_Jogger 6y ago
      Many corporate travelers can book and re-book with no change fees, so this happens more than you would expect. The most common reason I've seen is a large corporation cancelling or rescheduling an all-hands / quarterly meeting that everyone above a certain level (e.g. directors / VPs) from non-HQ offices travels to HQ to attend. For an Oakland to Las Vegas flight, I'd guess a conference, music festival, or sporting event was cancelled.
• fulldecent2 6y ago
  Woman buys insurance to make money... and somehow she is arrested. This reminds me of the other articles -- parents pay $500k to private university so their kids can be accepted... and then somehow they are arrested. When articles write about people being arrest, do bother to document what is the violation. Probably the best reading of "..." nowadays is "and making money is bad, so" or "and this made somebody higher-class than them sad, so".
  • chasing 6y ago
    Probably the best reading is: "Fraud is bad."
  • OscarCunningham 6y ago
    > Probably the best reading of "..." nowadays is "and making money is bad, so" or "and this made somebody higher-class than them sad, so". My understanding of the university admissions scandal was that the parents were defrauding the university by bribing the admissions staff to lie to the university about how good the candidates were. It would have been legal if they had instead been honest with the university and paid however much extra was needed to convince them to accept their children. But that would have cost them more than bribing individual staff. So I don't think that example fits your mould.
• SilasX 6y ago
  Heh, I actually did a junior version of this, myself. I play Dance Dance Revolution (video game were you press the buttons with your feet), and buy foam pads to play with. Stores loved to sell you their extended warranty, which everyone tells you is a bad deal. Well, I noticed that this particular brand/model (Red Octane 2.0 I think) failed pretty quickly[1]. So I always paid the $3, which entitled me to a quick, easily replacement (normally $50) when they inevitably broke down. [1] Like after a few months -- not soon enough to be annoying, but sooner than they're supposed to last.
• Markoff 6y ago
  that's not really that surprising, many travellers in Europe I know were buying lot of flights during pandemic knowing they will be cancelled and they will get bonus miles as compensation to accumulate them, you didn't even need insurance for that I know plenty of people who made hudnreds of euros on these low cost flights, it's same people who are buying error fares there is nothing fraudulent about it you can do actually same thing with sending packages insured for much higher value than is content to destinations where you know they are very likely to be stolen/lost
• deleted 6y ago
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• hansvm 6y ago
  Ignoring the identity fraud and supposing the information obtained were public, this thread seems to have a lot of people who believe that applying information arbitrage to insurance is in and of itself inherently wrong, and that's not a stance I think I can agree with. As a litmus test, when the roles are reversed and the insurance company overprices a policy we seem fine with that as a society because even though any individual can have a hugely disproportionate premium the company as a whole has bounded profits (both legally and due to competitive forces). We might even try to argue that an individual can't possibly know their own risk better than a team of actuaries and that they should accept that the premiums are actually correct. If an insurance company is allowed to knowingly profit 2x, 3x, or more on an individual's premiums based on their best models, why is an individual disallowed from doing the same if only using public information? If so, where do we draw the line? Is it at a break-even point? What if the insurance company were trying to target an individual for 15% profits; is that person allowed to engage in the contract if they think the company will only earn 3% on average since that would also demonstrate a model better than the company's? I can definitely see arguments against an individual having any _causal_ effect on the policy (e.g., like burning down a house), but I'm struggling to see why this kind of information arbitrage is inherently wrong.
  • runeks 6y ago
    I agree completely. I think it’s a super interesting discussion whether she’s actually done anything morally wrong (again, barring the identify fraud). It’s possible that the root cause of this is simply a mispricing of insurance caused by Chinese regulations.
• xiaosun 6y ago
  FWIW - Flight delay insurance in China is sort of like buying a scratch-off lottery ticket. The terminal is dotted with little kiosks where you buy the insurance for 20-50 yuan and hope it pays a couple thousand yuan for a delay. https://blogs.wsj.com/chinarealtime/2014/09/25/flight-delayed-in-china-theres-insurance-for-that/ https://blogs.wsj.com/chinarealtime/2014/09/25/flight-delaye...
  • deleted 6y ago
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• quickthrower2 6y ago
  Clever woman, she should have found a legal way to bet, or working for a trading firm, because she is good at it.
• mito88 6y ago
  from the article: "Unfortunately, the police caught up with her misdeeds and arrested her..." :)