Risk in insurance is more complicated than probability x cost. It is more something like probability x cost x liquid_captial / (liquid_capital - cost) Essent

Risk in insurance is more complicated than probability x cost. It is more something like probability x cost x liquid_captial / (liquid_capital - cost) Essentially if the cost is so high the insurer would take a massive hit. This is the same reason why normal people by health-insurance. Essentially the 'value' of money is not linear. The less money you have the more value a single dollar has.