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Weekend Thought

If it is truly the case that there are information asymmetries in insurance markets (i.e. firms do not know who their risky or non-risky customers are), then please explain to me again why we have/need laws that force insurers to charge the same price to all comers?

One Response to “Weekend Thought”

  1. Harry says:

    I am not sure there are any asymmetries in information in the insurance business, even if you have never filed a claim. The actuaries know everything about you.

    What they cannot predict is whether the government pitcher will throw a fastball, curve ball, or change-up, or, in the case of Ed Markey or Chuck Schumer, a screwball disrupting contractural agreements, confusing the Umpire, who symbolizes the Rule of Law.

    Some people might argue for more predictability, much better for actuaries to calculate premiums, but then there is good predictability and bad predictability. If the prince ruling you is predictably mad, the actuaries will adjust all premiums accordingly.

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