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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 expert

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.)
    - chii 6y ago
      > Someone did a better job of estimating odds than an insurance company did. They then defrauded the insurance company how come it's not fraud when insurance companies calculate the odds better than you, and yet it is fraud when you do it to the insurance companies?
      - ascorbic 6y ago
        Because you're not buying it to win money. You're buying it to limit downside loss, because aside from the massively wealthy, we are loss averse. It's worth our while to pay $200 to insure against a 1% chance of losing $10000, even though in purely probabilistic terms that's a bad deal, because most people can't afford an unexpected expense that large. Even people who can afford that, it's still more painful to lose it than to have a 99% chance of having wasted $100. The larger the potential downside, the bigger the incentive to insure against it, even when it's a bad deal.
        Supermancho 6y ago
        > Because you're not buying it to win money. There is no win or lose, if insurance is not gambling. If it is, then either side wins money with varying payout schedules.
      - foota 6y ago
        It's not. It's fraud when you lie about it.
    - saalweachter 6y ago
      > Someone did a better job of estimating odds than an insurance company did. Eh, I'm not sure that's really true, even. Flight insurance -- at least, all of the flight insurance I'm familiar with -- is a fixed-cost product. I doubt it is so much that the insurance company couldn't create separate risk pools, from their own analysis, but that it doesn't make sense as a business.
- rswail 6y ago
  It's clear evidence that the insurance industry is based on risk assessment and probabilities. Of course it is the same as gambling, except that the "game" is not necessarily biased in either direction. Actuaries spend their careers making these bets. That's why no insurance company will take a policy on a "sure thing". If she had taken on a similar bet in a market where insurance policies were bundled and sold, instead of a "credit default swap" you'd have a "on-time default swap" and it would be completely legal. But there isn't such a market, so she effectively made one for herself by using false identities and the arbitrage of being able to pick and choose when she would take her side of the swap.
  - NullPrefix 6y ago
    >except that the "game" is not necessarily biased in either direction Such a bold statement
    - deleted 6y ago
      [deleted]
  - viraptor 6y ago
    > except that the "game" is not necessarily biased in either direction. The insurance industry wouldn't exist if that was true. The whole profit there comes from the bias for the insurer.
    - throwawaygh 6y ago
      Large insurance companies have ten figure net incomes on top of paying out lavish executive salaries, paying out dividends, etc. But the game isn't biased. Right.
      - user5994461 6y ago
        Until there is a tornado or a flood then they have to pay 11 figures to cover damages.
unishark 6y ago
An easy loophole is to stop selling insurance to someone who has burned you for tens of thousands of dollars already. Except she used fake identities, which doesn't seem fair, or legal for that matter when it comes to air travel.
- dmurray 6y ago
  If you don't take the flights, I don't see why this would be illegal "when it comes to air travel". People book flights for other people or with fake names (as placeholders, for example, in a group booking) all the time. On the insurance side, it does sound like fraud.
  - astura 6y ago
    In general, knowingly and intentionally deceiving an insurance company for financial gain is fraud. The fact that somewhat similar behavior is not fraud in a completely different context is irrelevant to if the behavior is fraud in this context. Intentions 100% matter when it comes to insurance fraud.
ZoomStop 6y ago
It's hard to look at her work as anything but criminal when she used 20 fake identities to pull this off. Once she ran out what she could do under her own name and started using fake ones, she crossed a line.
- mkagenius 6y ago
  > Once she ran out what she could do under her own name and started using fake ones How do you know this? This may be a pre-emptive strategy Also, as mentioned in other comments: She didn't use fake identities, she booked on the behalf of family and friends.
  - corobo 6y ago
    Did they get the money?
    - foolmeonce 6y ago
      It says in the article that the insured traveller need not collect it. This was probably not a mistake in the terms, I.e. an employer buys employees and candidates tickets and wants to limit their own losses when the logistics fall through.
      - deleted 6y ago
        [deleted]
      - nogabebop23 6y ago
        historically insurance companies have let you buy many types of insurance for anybody, naming yourself the beneficiary. Pretty tough to not be caught these days, but this do lead to the obvious insure => "terrible accident" => collect cycle. Even then they tended to get caught eventually. Herman Mudgett did this several times around the 1893 Chicago World's Fair.
- literallycancer 6y ago
  I don't see what's so much better about paying a hobo to sign some papers compared to using a fake ID. End result is identical.
GoblinSlayer 6y ago
What kind of efficiency did it improve? Efficiency to resist such criminals? Is it really what insurance market exists for?
- ashtonkem 6y ago
  It seems like the contracts were not priced correctly. If they were, it would not be possible to game them so easily.
  - GoblinSlayer 6y ago
    What is the point of such correct price? To resist criminals?
    - recursive 6y ago
      That's just one benefit. The main one is to run a sustainable business.
    - ashtonkem 6y ago
      You would also want to price the contracts effectively to improve margins. If certain routes are liable to be delayed more often, you will want to charge a higher premium for them or refuse to insure them. This would both reduce the risk of abuse, and increase profits.
  - ajna91 6y ago
    This is circular reasoning. It was possible to game them because the contracts were not priced correctly. We know the contracts were not priced correctly because it was possible to game them.
    - pgwhalen 6y ago
      It feels to me like you’re just saying the same thing in two different ways, and that the reasoning is not circular.
robjan 6y ago
I would be more inclined to agree if she didn't fraudulently use 20+ names to avoid getting caught.
dragontamer 6y ago
Its kind of sad that the #1 comment right now is basically saying "the company involved here should have been charging its customers far, far more money", instead of protecting their customers and looking out for the best for them. Insurance is NOT a financial instrument. Insurance is supposed to be a safety mechanism that protects you if something bad happens. We can think of insurance as a call and/or put option. Financially, they behave almost identically to options. But that's not the intended use for the product. -------- Where you see inefficiency, I see humanism. The company believes that its users wouldn't act like this, and for the most part... citizens do not commit large scale fraud involving 20+ fake identities.
- deleted 6y ago
  [deleted]
- kasey_junk 6y ago
  “ Insurance is supposed to be a safety mechanism that protects you if something bad happens.” Virtually all financial instruments are used this way. Insurance is about buying/selling a particular form of risk just like any other financial instrument. The reason we treat it as one isn’t just because it can be modeled that way. That said this seems like fraud. Using assumed names isn’t removing an efficiency in the market it’s being duplicitous.
  - deleted 6y ago
    [deleted]
  - hansvm 6y ago
    > That said this seems like fraud. Using assumed names isn’t removing an efficiency in the market it’s being duplicitous. I agree this seems like fraud, but why can't it both remove an inefficiency and be duplicitous? From the standpoint of the insurance company's financials this isn't any different from coordinating with 20+ individuals to execute the same scheme. If the latter removes an inefficiency it should follow that this woman did the same.
    - 6y ago
newacct583 6y ago
> To me, she deserves every dollar she made for making the insurance market more efficient. And to others, she was committing obvious fraud. Notably, to her, this was fraud, because she used fake identities to buy the policies. The "I'm just an agent of libertarian market efficiency" excuse goes out the window once you start trying to hide your tracks.
manigandham 6y ago
There are numerous factors in pricing and one input is the sophistication of the buyer and their common behaviors. The pricing is just fine for typical travelers who want to insure their trip and are not using their past experience to distill high-probability delays with 20+ identities. Dynamic pricing isn't free to implement, and raising prices to account for accurately for delays may result in policies never bought by travelers who find them too expensive or a clear signal to get a better flight instead.
- chaorace 6y ago
  Of course, high cost of insurance is not necessarily a bad thing. If there are other viable, less risky flights, this would, I feel, be a healthy pressure.
perfunctory 6y ago
> The article says the insurance companies have now closed the loopholes she exploited. When I read that sentence in the article I immediately thought they closed it by optimising pricing or by challenging airlines. But no - as the next paragraph states - they closed it by adding a clause to the contract which basically forbids doing what this woman did. Go figure.
- notahacker 6y ago
  This is considerably less consumer hostile response than the realistic 'price-optimisation' alternative of excluding the flights people are most likely to need insurance for from the insurance pool [though it sounds like they've given themselves very broad scope to deny claims]
- emerongi 6y ago
  This is the only reasonable solution for them though. If you don't close it like this, you could end up spawning a whole market, and you're no longer selling a product (maybe not the most "optimized" product, but which still satisfies all parties), instead you're competing against this market of your own creation. Any sensible person would just add a clause to the terms.
dr-detroit 6y ago
She was gambling. This is crypto/mtg finance all over again. We need to cut this cancer out of our economy.
safgasCVS 6y ago
Insurance policies such as these are priced very simplistically for practical reasons allowing the product to be distributed widely on systems that may not be internet-connected at the time of sale. The pricing can be made more accurate reducing the potential for arbitrage but that needs to be traded off the additional overheads and ease of sale. Its not that insurers are stupid its more that we know some things are easier-solved with anti-fraud measures than fancier Rube Goldberg machines
- WhompingWindows 6y ago
  Can you explain more about how web apps may deal with 1/3 or 1/4 lapsed internet-connection? What sort of processes can you delay or smooth over? What kind of improvements do you see?
  - pinfisher 6y ago
    There is no simple answer to this.
ykevinator 6y ago
Totally right
fortran77 6y ago
Maybe they weren't mis-pricing. She had to use fraud and deception and fake names to buy all those contracts. Maybe they know that for one individual not trying to play pricing games, they can sell these contracts at a competitive price (don't forget they have to compete against other insurance companies) and still make a profit because most people aren't trying to game the system for a single contract for a single flight.
crazygringo 6y ago
A thousand times no. Just like a stock market is undermined by insider trading, so insurance markets are undermined by fraud. Insider trading and fraud don't mean stocks or policies are mispriced. Insider trading and fraud are breaking the social contract of what the products are meant for, which is why they're illegal. The article quotes: > "she was able to receive relevant information beforehand that tells her if the flight was going to be delayed or cancelled." Which sounds exactly like the insurance equivalent of insider trading. Buying insurance on something you already know is going to happen or not is fraud, plain and simple. The insurance company had loopholes too, but the loophole that prevented the company from finding out sooner was that she got payment from the airlines directly, rather than the insurance company. That's not mispricing. She was arrested because she committed insurance fraud, plain and simple.
- ytdytvhxgydvhh 6y ago
  > Buying insurance on something you already know is going to happen or not is fraud, plain and simple. I don’t think that’s quite the right definition. I know I’m going to die. I bought whole life insurance. I have not committed fraud.
  - mdpye 6y ago
    There's actually a different term for that - assurance is to compensate for things which are known will happen (e.g. you will die, at some point), insurance is for things which you don't (you will die during the finite term of the policy). So technically you bought life assurance. Perhaps consumer products are playing fast and loose with the technical terms because everyone says they want "insurance".
    - derefr 6y ago
      Is there a third term for something like "flood insurance", where there will definitely be a flood at some point—you're building on a floodplain—but not necessarily one within the lifetime of the policy, such that in theory profit can be made off of e.g. business that open, get insured, operate for years, and then close, without the flooding ever happening. ...but where there is a legal requirement for everyone in the area to "get insured" so that they don't have to lean on FEMA, and therefore in practice there's the opposite effect to the distribution of risk under public healthcare: rather than forcing healthy people who will get negligible benefit from their policies to get insured, such a requirement forces the insurance company to not be playing the lottery by offering only short-term policies that can maybe avoid a flood, but instead fixes them into always ending up covering a resulting flood (and therefore almost always defaulting in such cases and needing reinsurance coverage.)
giarc 6y ago
I think you missed the point where it says she lied about the flights being delayed. The Nanjing police announced on Friday afternoon, June 12, that Li had, on multiple occasions, faked information related to the delaying of flights, and scammed huge amounts of money from insurance companies.
hitpointdrew 6y ago
> 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. Couldn't agree more. She did nothing wrong in my book. She found a legal exploit, and exploited it. She was playing by the rules, she exposed a flaw, the flaw is now fixed. If she continues to do the exploit that would be a different story. 400k is small price to pay to close this kind of loophole.
- Benjamin_Dobell 6y ago
  > The 45-year-old woman, surnamed Li, used 20 other identities in addition to her own, to take out almost 900 travel insurance policies from 2015 to 2019. So identity fraud is just totally fine as long as you're screwing over insurance companies? Identity fraud aside, stuff like this drives up the cost of insurance for people who legitimately need it. It's clearly both illegal and immoral.
  - mikem170 6y ago
    >So identity fraud is just totally fine as long as you're screwing over insurance companies? Isn't it legal to buy an airline ticket for someone else? I've never heard of that being called identify fraud. >Identity fraud aside, stuff like this drives up the cost of insurance for people who legitimately need it. It's clearly both illegal and immoral. People have made the argument that what she did was illegal based on laws specific to insurance fraud. It's a tough to think about how companies, the stock market, banks, packaged securities, hedge funds, governments, and tax codes are all playing games with this but when a normal person does it they get thrown in jail. It seems we're basically ok with the rich and powerful working all kinds of loopholes in the law but not normal people? Doesn't seem so clear to me.
    - Benjamin_Dobell 6y ago
      > Isn't it legal to buy an airline ticket for someone else? She's not buying tickets for someone else. She's buying them for herself using other people's identities. It's not the same thing, and this is covered in the article. > It's a tough to think about how companies, the stock market, banks, packaged securities, hedge funds, governments, and tax codes are all playing games with this but when a normal person does it they get thrown in jail. From the article: > she was able to receive relevant information beforehand that tells her if the flight was going to be delayed or cancelled. Last I checked insider trading was illegal (and immoral) in the stock market too.

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.)
  - chii 6y ago
    > Someone did a better job of estimating odds than an insurance company did. They then defrauded the insurance company how come it's not fraud when insurance companies calculate the odds better than you, and yet it is fraud when you do it to the insurance companies?
    - ascorbic 6y ago
      Because you're not buying it to win money. You're buying it to limit downside loss, because aside from the massively wealthy, we are loss averse. It's worth our while to pay $200 to insure against a 1% chance of losing $10000, even though in purely probabilistic terms that's a bad deal, because most people can't afford an unexpected expense that large. Even people who can afford that, it's still more painful to lose it than to have a 99% chance of having wasted $100. The larger the potential downside, the bigger the incentive to insure against it, even when it's a bad deal.
      - Supermancho 6y ago
        > Because you're not buying it to win money. There is no win or lose, if insurance is not gambling. If it is, then either side wins money with varying payout schedules.
    - foota 6y ago
      It's not. It's fraud when you lie about it.
  - saalweachter 6y ago
    > Someone did a better job of estimating odds than an insurance company did. Eh, I'm not sure that's really true, even. Flight insurance -- at least, all of the flight insurance I'm familiar with -- is a fixed-cost product. I doubt it is so much that the insurance company couldn't create separate risk pools, from their own analysis, but that it doesn't make sense as a business.
rswail 6y ago
It's clear evidence that the insurance industry is based on risk assessment and probabilities. Of course it is the same as gambling, except that the "game" is not necessarily biased in either direction. Actuaries spend their careers making these bets. That's why no insurance company will take a policy on a "sure thing". If she had taken on a similar bet in a market where insurance policies were bundled and sold, instead of a "credit default swap" you'd have a "on-time default swap" and it would be completely legal. But there isn't such a market, so she effectively made one for herself by using false identities and the arbitrage of being able to pick and choose when she would take her side of the swap.
- NullPrefix 6y ago
  >except that the "game" is not necessarily biased in either direction Such a bold statement
  - deleted 6y ago
    [deleted]
- viraptor 6y ago
  > except that the "game" is not necessarily biased in either direction. The insurance industry wouldn't exist if that was true. The whole profit there comes from the bias for the insurer.
  - throwawaygh 6y ago
    Large insurance companies have ten figure net incomes on top of paying out lavish executive salaries, paying out dividends, etc. But the game isn't biased. Right.
    - user5994461 6y ago
      Until there is a tornado or a flood then they have to pay 11 figures to cover damages.

unishark 6y ago

An easy loophole is to stop selling insurance to someone who has burned you for tens of thousands of dollars already. Except she used fake identities, which doesn't seem fair, or legal for that matter when it comes to air travel.

dmurray 6y ago
If you don't take the flights, I don't see why this would be illegal "when it comes to air travel". People book flights for other people or with fake names (as placeholders, for example, in a group booking) all the time. On the insurance side, it does sound like fraud.
- astura 6y ago
  In general, knowingly and intentionally deceiving an insurance company for financial gain is fraud. The fact that somewhat similar behavior is not fraud in a completely different context is irrelevant to if the behavior is fraud in this context. Intentions 100% matter when it comes to insurance fraud.

ZoomStop 6y ago

It's hard to look at her work as anything but criminal when she used 20 fake identities to pull this off. Once she ran out what she could do under her own name and started using fake ones, she crossed a line.

mkagenius 6y ago
> Once she ran out what she could do under her own name and started using fake ones How do you know this? This may be a pre-emptive strategy Also, as mentioned in other comments: She didn't use fake identities, she booked on the behalf of family and friends.
- corobo 6y ago
  Did they get the money?
  - foolmeonce 6y ago
    It says in the article that the insured traveller need not collect it. This was probably not a mistake in the terms, I.e. an employer buys employees and candidates tickets and wants to limit their own losses when the logistics fall through.
    - deleted 6y ago
      [deleted]
    - nogabebop23 6y ago
      historically insurance companies have let you buy many types of insurance for anybody, naming yourself the beneficiary. Pretty tough to not be caught these days, but this do lead to the obvious insure => "terrible accident" => collect cycle. Even then they tended to get caught eventually. Herman Mudgett did this several times around the 1893 Chicago World's Fair.
literallycancer 6y ago
I don't see what's so much better about paying a hobo to sign some papers compared to using a fake ID. End result is identical.

GoblinSlayer 6y ago

What kind of efficiency did it improve? Efficiency to resist such criminals? Is it really what insurance market exists for?

ashtonkem 6y ago
It seems like the contracts were not priced correctly. If they were, it would not be possible to game them so easily.
- GoblinSlayer 6y ago
  What is the point of such correct price? To resist criminals?
  - recursive 6y ago
    That's just one benefit. The main one is to run a sustainable business.
  - ashtonkem 6y ago
    You would also want to price the contracts effectively to improve margins. If certain routes are liable to be delayed more often, you will want to charge a higher premium for them or refuse to insure them. This would both reduce the risk of abuse, and increase profits.
- ajna91 6y ago
  This is circular reasoning. It was possible to game them because the contracts were not priced correctly. We know the contracts were not priced correctly because it was possible to game them.
  - pgwhalen 6y ago
    It feels to me like you’re just saying the same thing in two different ways, and that the reasoning is not circular.

robjan 6y ago

I would be more inclined to agree if she didn't fraudulently use 20+ names to avoid getting caught.

dragontamer 6y ago

Its kind of sad that the #1 comment right now is basically saying "the company involved here should have been charging its customers far, far more money", instead of protecting their customers and looking out for the best for them. Insurance is NOT a financial instrument. Insurance is supposed to be a safety mechanism that protects you if something bad happens. We can think of insurance as a call and/or put option. Financially, they behave almost identically to options. But that's not the intended use for the product. -------- Where you see inefficiency, I see humanism. The company believes that its users wouldn't act like this, and for the most part... citizens do not commit large scale fraud involving 20+ fake identities.

deleted 6y ago
[deleted]
kasey_junk 6y ago
“ Insurance is supposed to be a safety mechanism that protects you if something bad happens.” Virtually all financial instruments are used this way. Insurance is about buying/selling a particular form of risk just like any other financial instrument. The reason we treat it as one isn’t just because it can be modeled that way. That said this seems like fraud. Using assumed names isn’t removing an efficiency in the market it’s being duplicitous.
- deleted 6y ago
  [deleted]
- hansvm 6y ago
  > That said this seems like fraud. Using assumed names isn’t removing an efficiency in the market it’s being duplicitous. I agree this seems like fraud, but why can't it both remove an inefficiency and be duplicitous? From the standpoint of the insurance company's financials this isn't any different from coordinating with 20+ individuals to execute the same scheme. If the latter removes an inefficiency it should follow that this woman did the same.
  - 6y ago

newacct583 6y ago

> To me, she deserves every dollar she made for making the insurance market more efficient. And to others, she was committing obvious fraud. Notably, to her, this was fraud, because she used fake identities to buy the policies. The "I'm just an agent of libertarian market efficiency" excuse goes out the window once you start trying to hide your tracks.

manigandham 6y ago

There are numerous factors in pricing and one input is the sophistication of the buyer and their common behaviors. The pricing is just fine for typical travelers who want to insure their trip and are not using their past experience to distill high-probability delays with 20+ identities. Dynamic pricing isn't free to implement, and raising prices to account for accurately for delays may result in policies never bought by travelers who find them too expensive or a clear signal to get a better flight instead.

chaorace 6y ago
Of course, high cost of insurance is not necessarily a bad thing. If there are other viable, less risky flights, this would, I feel, be a healthy pressure.

perfunctory 6y ago

> The article says the insurance companies have now closed the loopholes she exploited. When I read that sentence in the article I immediately thought they closed it by optimising pricing or by challenging airlines. But no - as the next paragraph states - they closed it by adding a clause to the contract which basically forbids doing what this woman did. Go figure.

notahacker 6y ago
This is considerably less consumer hostile response than the realistic 'price-optimisation' alternative of excluding the flights people are most likely to need insurance for from the insurance pool [though it sounds like they've given themselves very broad scope to deny claims]
emerongi 6y ago
This is the only reasonable solution for them though. If you don't close it like this, you could end up spawning a whole market, and you're no longer selling a product (maybe not the most "optimized" product, but which still satisfies all parties), instead you're competing against this market of your own creation. Any sensible person would just add a clause to the terms.

dr-detroit 6y ago

She was gambling. This is crypto/mtg finance all over again. We need to cut this cancer out of our economy.

safgasCVS 6y ago

Insurance policies such as these are priced very simplistically for practical reasons allowing the product to be distributed widely on systems that may not be internet-connected at the time of sale. The pricing can be made more accurate reducing the potential for arbitrage but that needs to be traded off the additional overheads and ease of sale. Its not that insurers are stupid its more that we know some things are easier-solved with anti-fraud measures than fancier Rube Goldberg machines

WhompingWindows 6y ago
Can you explain more about how web apps may deal with 1/3 or 1/4 lapsed internet-connection? What sort of processes can you delay or smooth over? What kind of improvements do you see?
- pinfisher 6y ago
  There is no simple answer to this.

ykevinator 6y ago

Totally right

fortran77 6y ago

Maybe they weren't mis-pricing. She had to use fraud and deception and fake names to buy all those contracts. Maybe they know that for one individual not trying to play pricing games, they can sell these contracts at a competitive price (don't forget they have to compete against other insurance companies) and still make a profit because most people aren't trying to game the system for a single contract for a single flight.

crazygringo 6y ago

A thousand times no. Just like a stock market is undermined by insider trading, so insurance markets are undermined by fraud. Insider trading and fraud don't mean stocks or policies are mispriced. Insider trading and fraud are breaking the social contract of what the products are meant for, which is why they're illegal. The article quotes: > "she was able to receive relevant information beforehand that tells her if the flight was going to be delayed or cancelled." Which sounds exactly like the insurance equivalent of insider trading. Buying insurance on something you already know is going to happen or not is fraud, plain and simple. The insurance company had loopholes too, but the loophole that prevented the company from finding out sooner was that she got payment from the airlines directly, rather than the insurance company. That's not mispricing. She was arrested because she committed insurance fraud, plain and simple.

ytdytvhxgydvhh 6y ago
> Buying insurance on something you already know is going to happen or not is fraud, plain and simple. I don’t think that’s quite the right definition. I know I’m going to die. I bought whole life insurance. I have not committed fraud.
- mdpye 6y ago
  There's actually a different term for that - assurance is to compensate for things which are known will happen (e.g. you will die, at some point), insurance is for things which you don't (you will die during the finite term of the policy). So technically you bought life assurance. Perhaps consumer products are playing fast and loose with the technical terms because everyone says they want "insurance".
  - derefr 6y ago
    Is there a third term for something like "flood insurance", where there will definitely be a flood at some point—you're building on a floodplain—but not necessarily one within the lifetime of the policy, such that in theory profit can be made off of e.g. business that open, get insured, operate for years, and then close, without the flooding ever happening. ...but where there is a legal requirement for everyone in the area to "get insured" so that they don't have to lean on FEMA, and therefore in practice there's the opposite effect to the distribution of risk under public healthcare: rather than forcing healthy people who will get negligible benefit from their policies to get insured, such a requirement forces the insurance company to not be playing the lottery by offering only short-term policies that can maybe avoid a flood, but instead fixes them into always ending up covering a resulting flood (and therefore almost always defaulting in such cases and needing reinsurance coverage.)

giarc 6y ago

I think you missed the point where it says she lied about the flights being delayed. The Nanjing police announced on Friday afternoon, June 12, that Li had, on multiple occasions, faked information related to the delaying of flights, and scammed huge amounts of money from insurance companies.

hitpointdrew 6y ago

> 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. Couldn't agree more. She did nothing wrong in my book. She found a legal exploit, and exploited it. She was playing by the rules, she exposed a flaw, the flaw is now fixed. If she continues to do the exploit that would be a different story. 400k is small price to pay to close this kind of loophole.

Benjamin_Dobell 6y ago
> The 45-year-old woman, surnamed Li, used 20 other identities in addition to her own, to take out almost 900 travel insurance policies from 2015 to 2019. So identity fraud is just totally fine as long as you're screwing over insurance companies? Identity fraud aside, stuff like this drives up the cost of insurance for people who legitimately need it. It's clearly both illegal and immoral.
- mikem170 6y ago
  >So identity fraud is just totally fine as long as you're screwing over insurance companies? Isn't it legal to buy an airline ticket for someone else? I've never heard of that being called identify fraud. >Identity fraud aside, stuff like this drives up the cost of insurance for people who legitimately need it. It's clearly both illegal and immoral. People have made the argument that what she did was illegal based on laws specific to insurance fraud. It's a tough to think about how companies, the stock market, banks, packaged securities, hedge funds, governments, and tax codes are all playing games with this but when a normal person does it they get thrown in jail. It seems we're basically ok with the rich and powerful working all kinds of loopholes in the law but not normal people? Doesn't seem so clear to me.
  - Benjamin_Dobell 6y ago
    > Isn't it legal to buy an airline ticket for someone else? She's not buying tickets for someone else. She's buying them for herself using other people's identities. It's not the same thing, and this is covered in the article. > It's a tough to think about how companies, the stock market, banks, packaged securities, hedge funds, governments, and tax codes are all playing games with this but when a normal person does it they get thrown in jail. From the article: > she was able to receive relevant information beforehand that tells her if the flight was going to be delayed or cancelled. Last I checked insider trading was illegal (and immoral) in the stock market too.