wouldn't be able to tell the difference between a payment to somebody to burn down the lighthouse and an insurance contract A prediction market provides trust

wouldn't be able to tell the difference between a payment to somebody to burn down the lighthouse and an insurance contract A prediction market provides trust that a payment will happen if a specific event happens. But insurance also requires another kind of trust. If you want to insure your goods, the insurer needs to evaluate the moral hazard in order to determine his rate. But here, he doesn't know if the buyer of the contract is the owner of the lighthouse, so there's no way he can do that: maybe the buyer turns out to be someone who won't suffer from the loss of the lighthouse and who can easily commit a crime. Because the moral hazard is huge, the insurer can't provide insurance at competitive rates. Insurance contracts where the buyer of the insurance is anonymous to the insurer don't seem desirable to me. They enable assassination markets but have no real use (except for small amounts that won't create moral hazard, but I'd call that betting rather than insurance).