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> If I believe insurance is well-priced, the cost ought to be pretty close to the value it’s providing me The value of insurance to the buyer depends on the bu
by kqr 2y ago
> If I believe insurance is well-priced, the cost ought to be pretty close to the value it’s providing me
The value of insurance to the buyer depends on the buyer's wealth. The insurance the electronics store offers on the tablet I buy is well-priced for their target audience but not for someone with my emergency expense buffer.
- aoanevdus 2y agoBut how do I evaluate how the magnitude of effect of my income on the value I get from the insurance (relative to the average buyer who sets the market price) if I’m lacking the figures to compute the Kelly criterion? Is it useful to me at all as a consumer? Is there version of the formula I can use if I want to implicitly accept the work of the insurance company’s actuaries, but skew the result to account for how I differ from the average customer?
- kqr 2y agoThat's an interesting question! The actual risk assessments thr insurer does are obviously confidential, but you're asking whether we can reverse engineer their premiums into underlying probability estimations? So we'd still be estimating probabilities, but based on information leaked from insurers instead of first principles. Could work! I don't know how, though.