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Why choose casualty to go into?

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  • #16
    Originally posted by gmalivuk View Post
    It seems like it would only be fraud if they explicitly misrepresented the level of risk. But simply offering to insure against cell phone radiation or gamma ray bursters or zombiepocalypse has the advantage that simply by mentioning such a policy, you can *suggest* that it's a risk worth insuring against, without ever having to actually lie about any real numbers.
    This honestly makes me somewhat uncomfortable. If the risk is essentially zero (i.e. zombiepocalypse), how could a policy insuring against this risk be justified as worth insuring against? This sounds no different than selling someone a device that claims very ambiguous health benefits, knowing full well that it does not have any health benefits at all (beyond placebo of course ... should we call this placebo insurance?).

    The idea seems unethical, because at best, you are misleading or not divulging the situation in its entirety (at worst, you are inflating the risk, even if by "suggestion", to vulnerable and misinformed clients). In any case, I wonder if anyone has any experiences of this kind of thing. I'm only speculating and toying with this idea.

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    • #17
      Originally posted by majamin View Post
      This sounds no different than selling someone a device that claims very ambiguous health benefits, knowing full well that it does not have any health benefits at all
      You mean like all the stuff they advertise for with the caveat that "These statements have not been approved by the FDA" or whatever?

      Sure, I agree that it's sort of unethical to insure against something when you the insurer know full well the risk is essentially zero. But unethical doesn't mean illegal, and that doesn't make it fraud in the legal sense.

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      • #18
        I don't know about P&C risk but DOI looks very closely at what's filed by Health insurers.

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        • #19
          I someone is willing to take the losing side of a bet there will always be someone to take the winning side.

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          • #20
            Originally posted by majamin View Post
            This honestly makes me somewhat uncomfortable. If the risk is essentially zero (i.e. zombiepocalypse), how could a policy insuring against this risk be justified as worth insuring against? This sounds no different than selling someone a device that claims very ambiguous health benefits, knowing full well that it does not have any health benefits at all (beyond placebo of course ... should we call this placebo insurance?).

            The idea seems unethical, because at best, you are misleading or not divulging the situation in its entirety (at worst, you are inflating the risk, even if by "suggestion", to vulnerable and misinformed clients). In any case, I wonder if anyone has any experiences of this kind of thing. I'm only speculating and toying with this idea.
            Remember, the industry is constantly changing. You can never actually be an "expert in insurance" no matter how much you know. The causal link between cell phone radiation and cancer or tumours or other effects has not been proven yet, although there is the possibility that it could be proven. It does not need to actually be proven either. Only that the general consensus (in whatever field of specialty) is that it has been proven.

            Insurers are not radiologists, nor are they medical researchers (although they may employ these professionals from time to time as expert witnesses, consultants, etc.). Insurers are specialists in risk financing. There have been plenty of things that the general consensus has changed on with medical research. Insurers are accepting risks based on the fact that a claim could arise in the future (depending on statutory conditions and contract provisions) where a policy could pay out based on an occurence that occurred decades prior.

            Yes, it is possible that the current general consensus in the scientific community is that there is no causal link between cell phone radiation and cancer or tumour. That only needs to change for a time for a liability claim to occur. Remember, also, that the insurer doesn't just indemnify in the case where the defendant is found guilty of negligence or found liable for their product (products liability); there is also the possibility that a claim is brought against the defendant who is innocent, but the insurer has agreed to foot the defence bill (which could run into the hundreds of thousands to millions). They, of course, would subrogate against the claimant for lawyer fees and defence costs if defendant is not found guilty, but no "out-of-pocket" expenses (depending on policy provisions) help the bottom line too. Time value of money and opportunity cost are factors.

            Especially when there are so many debates about an issue (cell phone radiation, calorie consumption (McDonald's Lawsuit), etc.) frivolous lawsuits are a risk, even if they only cause reputational damage to a company/person. They take time, money, and expertise to defend, and net income losses almost always result. There will be damages to collect whether innocent or not. Whether the case is provable or not.

            Just because an award may not be issued, doesn't mean that a loss has not occured. And if a loss has occurred (which will most likely be the case if you have to defend your company in court), an insured can usually be indemnified.
            Last edited by bsd058; November 4 2011, 04:14 PM. Reason: clarification

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            • #21
              Why P&C?

              I think Joe Orez's reply (from 10 years ago!!!) still makes sense. P&C actuaries will be working on things like insurance and insurance implications for driverless cars, drones, cyber liability, climate change and a seemingly unlimited list of new kinds of risks. Life and health actuaries will be working on (yawn) life and health. Which of the two branches of actuarial work seemd more interesting now, and in the future?

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