4 ms·
... and the question was about the aggregate effect. What happens if all life insurers go bankrupt?
by FabHK 1y ago
... and the question was about the aggregate effect. What happens if all life insurers go bankrupt?
- hiAndrewQuinn 1y agoEvery single life insurer? All at once? Jeez.... I guess in that scenario I become a billionaire because it will be very easy to scoop up some VC money to snoop up some of those newly unemployed actuaries to monopolize the market at a profit margin an order of magnitude larger than any of my now non-existent competition, because this is a financial product and doesn't require months of building a factory or something to offer.
- ecb_penguin 1y agoIf you think it's that simple, you have no idea what you're talking about. How many years experience do you have in the insurance industry that you're so confident to talk like this? > because this is a financial product and doesn't require months of building a factory or something to offer. How many financial instruments have you launched? If the answer is zero, you should refrain from any conversations on the topic because your opinion literally means nothing.
- hiAndrewQuinn 1y agoI do actually think it's that simple, yes. Term life is just not that complicated a product at heart. Onus is on you to prove that if every single life insurance provider was suddenly Thanos snapped out of existence tomorrow, we wouldn't see a swarm of hungry financial professionals swoop right back in to recreate the service within weeks. That seems like a laughable claim to me, but maybe you know something I don't. (Edit, for future readers: ecb_penguin seems to have missed the question earlier in the thread I was responding to: >... and the question was about the aggregate effect. What happens if all life insurers go bankrupt? Emphasis mine. This was to clarify that yes, the original commenter meant literally all providers.)
- ecb_penguin 1y agoOk, so you have no experience and you're just making things up. > Term life is just not that complicated a product at heart Sure, it's easy if you don't know what you're talking about and just make stuff up! > Onus is on you to prove that if every single life insurance provider was suddenly Thanos snapped out of existence tomorrow Literally nobody said that would happen. Now you're arguing points that nobody made. You have no experience in the area, arguing things nobody said. You're perfect for VC money, lmao. > That seems like a laughable claim to me Nobody made that claim. Why are you laughing at things nobody is saying? That's weird. > That seems like a laughable claim to me, but maybe you know something I don't. I would 100% guarantee people that have worked in an industry know more about it than you do. Textbook demonstration of the Dunning-Kruger effect. You have no knowledge or experience in an area, but you're confident you know how it works, moreso than the actual experts. https://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect https://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect
- ecb_penguin 1y ago"the Dunning–Kruger effect is the thesis that those who are incompetent in a given area tend to be ignorant of their incompetence, i.e., they lack the metacognitive ability to become aware of their incompetence. This definition lends itself to a simple explanation of the effect: incompetence often includes being unable to tell the difference between competence and incompetence." I think this very accurately sums up your comments.
- hiAndrewQuinn 1y agoWell jeez, that sounds awful. Thank goodness I've always been great at everything I've done so I never gave to face this.
- ecb_penguin 1y agoWell, at least you stopped arguing about how easy term life insurance is.
- eru 1y ago
- eru 1y agoI think you are misunderstanding the counterfactual. Right now, it would be hard for an amateur to make a living starting up a new life insurance company, because there's lots of competent competition. However, _if_ all existing life insurers went bankrupts, then, yes, you could easily make a killing by starting a new slightly less incompetent life insurance company.
- carlosjobim 1y agoThat is great, they are by definition a net negative on the economy as a whole? You shouldn't gamble on your own health.
- _9ptr 1y agoOh come on, you can't be serious. It's not a gamble, you transfer your risk to a collective.
- eru 1y agoIt doesn't matter whether your counterparty for your insurance is a collective or a single individual like Warren Buffett. The 'collective' part is a distraction when trying to understand insurance. Similar for insurance to work you don't need to have a group of people who are in the same situation as you: in principle an insurer can work out the risks, even if you are in a unique situation. It's just that working these things out costs time and money, so it's cheaper for you, if you are like everyone else. But eg if you are a famous singer, you can insure your voice just fine. Companies also regularly purchase insurance against customers winning prizes. See https://en.wikipedia.org/wiki/Prize_indemnity_insurance https://en.wikipedia.org/wiki/Prize_indemnity_insurance
- eclipticplane 1y agoPerhaps some life insurance products fall into that category. For many families, though, term life insurance plays a big part into ensuring financial security if one income earner dies prematurely.
- DrillShopper 1y agoIf you want to gamble on your health then you want a tontine, not life insurance.
- deleted 1y ago[deleted]
- A_D_E_P_T 1y agoLife insurance, in the past, was frequently illegal. I'd argue that it should be illegal again, as a moral hazard (directly contributing to countless murders and other schemes) and as a particularly morbid form of gambling.
- eru 1y agoWhy would they all go bankrupt? Seems silly. Yes, some life insurance companies can make mistakes or get unlucky. after a few went bankrupt from whatever you are imagining, you'd think that the remaining companies would change their risk models or simply charge higher premiums?