RE: DNA of relative indicts man, cuckolding ignored
When AAA Insurance meets with Joe Sixpack to discuss his health or life or earthquake insurance, they seek to collect enough information to have a reasonable chance of turning a profit on the deal. Else why would they exist as a business?
But there is a necessary asymmetry here. If you could determine with good precision whether someone will be affected by an illness, when, how much, etc, then this wouldn't work, save for superstition on the part of Joe Sixpack. Since the contract is based on a bet on the likelihood of premium/payouts balance, the more you can find out about the future of the insured person's organism future, the closer the premiums will match the payouts, reliably. *IF* you can determine this, of course. So the goal will be for the insurer to get access to as much info as possible to assess how to set the premiums, while preventing the insured from knowing as much, so there is still the uncertainty and the value of "peace of mind" gotten by the insured, and that's worth something too. The converse is also true. And both raise the problem of assessment of the data - how does the insurer get the data (getting DNA from the would be insured ? with the insured's knowledge or not ? From the contract clause that subordinates the insurance to the supplying of the data by the insured ? Will credit bureaus expand to cover this kind of thing ?) If there is total symmetry, insurance loses its point entirely. Could we see a gradual disappearance of some sorts of insurance for events that cease to be probabilistic ? Just musing. All of it already happens, but I'm curious about the limit of it (in the mathemetical sense) when the precision of the prediction tends towards infinity. -- Vincent Penquerc'h
On Tuesday, July 8, 2003, at 02:55 AM, Vincent Penquerc'h wrote:
When AAA Insurance meets with Joe Sixpack to discuss his health or life or earthquake insurance, they seek to collect enough information to have a reasonable chance of turning a profit on the deal. Else why would they exist as a business?
But there is a necessary asymmetry here. If you could determine with good precision whether someone will be affected by an illness, when, how much, etc, then this wouldn't work, save for superstition on the part of Joe Sixpack. Since the contract is based on a bet on the likelihood of premium/payouts balance, the more you can find out about the future of the insured person's organism future, the closer the premiums will match the payouts, reliably. *IF* you can determine this, of course.
Sure, this is what "price discovery" is all about, in many contexts and in many markets. "Reasoning with incomplete information" is the basis for just about everything. Animals reason without complete information, insurance companies reason without complete information, we all do. I don't claim either party in an insurance contract knows the future, or even knows the probabilities of things happening.
So the goal will be for the insurer to get access to as much info as possible to assess how to set the premiums, while preventing the insured from knowing as much, so there is still the uncertainty and the value of "peace of mind" gotten by the insured, and that's worth something too. The converse is also true. And both raise the problem of assessment of the data - how does the insurer get the data (getting DNA from the would be insured ? with the insured's knowledge or not ? From the contract clause that subordinates the insurance to the supplying of the data by the insured ? Will credit bureaus expand to cover this kind of thing ?) If there is total symmetry, insurance loses its point entirely.
Knowing a lot about DNA still doesn't mean the future is known...when or if pregnancies will occur, when or if a fall from a cliff will occur, or, obviously, when some rare disease will appear. Insurers already seek maximum information. This is their "right" (in the sense that the signing of an insurance contract is a mutually uncoerced transaction).
Could we see a gradual disappearance of some sorts of insurance for events that cease to be probabilistic ? Just musing. All of it already happens, but I'm curious about the limit of it (in the mathemetical sense) when the precision of the prediction tends towards infinity.
As I said, many corporations choose to self-insure. Partly because they can carry the costs of coverage of rare events themselves, partly because they have excellent estimates of what ranges of events are likely to occur. Insurance has been in a process of evolutionary learning and better estimation for decades, even centuries. It shows no signs of going away. In fact, better estimation of risks has generally led to more and more refined kinds of insurance, even niche market insurance. Let me give an example: A friend of mine just told me that his very elderly parents had to be flown home, with a medical attendant, from St. Petersburg, Russia to San Francisco. I don't know the full details, as his comment was in an e-mail message, but I know his parents were on some kind of Baltic Sea cruise. My friend said the emergency flight home was very expensive, but that his father had for the first time purchased "trip insurance," so the costs are covered. This kind of insurance didn't exist in the 1950s, that's for sure. More information means someone thinks they can make a buck making a certain kind of bet. Sometimes they bet wrong, except betting wrong is part of the scheme. The larger issue is that these transactions be uncoerced. The crypto significance may be a bit abstract, but it's related to selective disclosure of information, e.g., uncovering one of a series of covered coins, or showing a hand of cards. Alice and Bob play various games, sometimes buying disclosure of bits of information. "All crypto is economics" is just another way of saying the world and people in it do not have perfect information about the state of others, about their intents, about the future. Both investors and actuaries are in the business of trying to estimate and predict better than others. --Tim May "Ben Franklin warned us that those who would trade liberty for a little bit of temporary security deserve neither. This is the path we are now racing down, with American flags fluttering."-- Tim May, on events following 9/11/2001
Okay, I will make one last stab at showing why medical/health insurance is different from other forms of insurance, then, unless something really new appears, let it drop. I don't want to waste anyone's time and it was not that important to me in the first place. I have no love for any insurance provider. My attempt to understand does not imply approval. What I consider to be important and relevant, is the next 10 or so years where the engineering phase resulting from the mapping/sequencing of human genome will get into high gear. We will all be able to know more about each other than ever before and be able to manipulate the building blocks of life. This will have a major impact on all of us. Now, for the insurance stuff. If I take out boat insurance and my boat sinks, I collect for the boat (assuming my policy was written that way and I did nothing to invalidate it). The parties involved are myself and the insurance company. If I take out life insurance, when I die, my beneficiary collects from the insurance company, only because I am dead and cannot collect myself. If my car is wrecked, I collect from the insurance company (I or they may have to pay a lien holder). In the medical insurance game, I pay a premium to the insurance company. When I need to collect (ie use medical services) I go to a physician or hospital and they get paid for providing services by the insurer. I do not collect money for breaking my arm or catching the flu. It is not enough to call all insurance games the same just because the profit motive exists for all of them. That's like saying baseball and basketball are the same because they both use balls. The difference is in the existance of the third party (medical professionals), required because it is life maintenance, not a simple betting game like the other insurance games. If my boat is only damaged, I can collect the money and fix it myself or not, as I please. The same is not true of health insurance. Imagine that I break my arm, then insist that I be paid whatever it would have cost to fix it. I could decide to fix it myself or not fix it at all. Or take the money and go my choice of healer. Because of this structure, I do not accept that insurance companies need to know anything beyond the minimum about me. They know how to price it without detailed personal information. If this is not clear enough, so be it. Lastly, medical insurance is often (not always) coerced. For example, in a divorce case, especially with kids involved, one or both parents will be required to carry it. If you want to be full time student in Massachusetts, you are required to carry it (and telling me to give up my choice of being a student is still being coerced.). If you want a job in Massachusetts, you can only choose which provider you want. Not to carry it is not a choice. This may not be true in other states, but it is true in some. I used to live in Mass. cheers, bob
participants (3)
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Stormwalker -
Tim May -
Vincent Penquerc'h