I agree the reasoning sounds wrong, but the quote sounds about right. If insuring $10M for one earthquake costs $10M x 1/5 = $2M, insuring for two symultaneous

I agree the reasoning sounds wrong, but the quote sounds about right. If insuring $10M for one earthquake costs $10M x 1/5 = $2M, insuring for two symultaneous ones should cost something around $10M x 1/5^2 = $400K. Another surprising thing in that example is that the guy says he could get away with quoting $4M? If insuring either factory for $10M (or insuring both for $5M) costs about $2M, I'd suppose that's the upper bound for a cost evaluation, even if you're lazy.