My view on this, is that insurance companies are performing arbitrage across objective functions. Insurance companies car about the expected return of their pre

My view on this, is that insurance companies are performing arbitrage across objective functions. Insurance companies car about the expected return of their premiums. For individual car-owners, it's not the expected value that matters so much, it's that you don't want to not have a car. In other words, they're optimizing against the Minimax objective function (minimizing the maximum loss). The insurance company can average across hundreds of accidents, but an individual car-owner cannot. So yeah, if you look at the expected values of your premiums, it's a loss. But that doesn't necessarily mean it's a sucker's bet. This is, of course, predicated on the idea that a car accident is a relatively catastrophic event. If you have enough money in savings that you can sign a check and walk away, than it's not really in that category anymore, and the Minimax may not make sense as an objective function. So, I guess I do agree with the headline, just not the article behind it.