Uncertain Risk vs. Infinite Risk
Not every negative economic event can be insured. For effective risk pooling, the risks considered should be unpredictable and dispersed. And in this case, if such a negative event is predicted, then that event is definitely not worth the risk - and you cannot insure to meet the certainty.
Also, on the flip side, it is silly to cover a dense risk. Insurance company costs and profits will only be passed on the cost of the event in the insurance pool. Thus, everyone in the insurance pool is filing a claim, leaving the pool with little or no company to cover the basic risk and just being empty to pay for themselves.
Not every negative economic event can be insured. For effective risk pooling, the risks considered should be unpredictable and dispersed. And in this case, if such a negative event is predicted, then that event is definitely not worth the risk - and you cannot insure to meet the certainty.
Also, on the flip side, it is silly to cover a dense risk. Insurance company costs and profits will only be passed on the cost of the event in the insurance pool. Thus, everyone in the insurance pool is filing a claim, leaving the pool with little or no company to cover the basic risk and just being empty to pay for themselves.
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