>The whole point of insurance is to create a risk pool. The more information one has, the less sense it makes to have insurance at all. Yes! Exactly. This is

>The whole point of insurance is to create a risk pool. The more information one has, the less sense it makes to have insurance at all. Yes! Exactly. This is my entire point. The point of insurance is to spread around randomness, bad luck. >For example, suppose you had a genetic condition that made it a near-certainty you'd die of cancer. Under your model, no one would sell you cancer insurance. Yes, this is already how the world works already. This isn't "my model" it is just how insurance already works. It is based on an assessment of risk. Note that you may still be able to get the insurance, but all you would be doing is hedging against the risk you get it sooner or later than you would expect to get it on average. Might still be useful if you have a mortgage and a young family. >On the other side of the coin, suppose you had a genetic condition that made you virtually immune to cancer. In that case, you'd be foolish to buy cancer insurance. Yes obviously...? This is why the first category exists too. If you allow people that know they're higher risk to insure but allow people that know they're lower risk not to, then insurance doesn't work. This is why you have a legal duty to disclose all relevant information in your possession to your insurance company.