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Comment by afarrell | Hacker News Reader

> because insurers don't offer beehive insurance

This surprises me. Is it just a matter of "nobody thought to get into this market yet"? I'd thought this was the role that Lloyds of London already played. If a bunch of Black churches from Alabama had access to Lloyds of London back in 1956, what are the barriers to a farmer from Iowa in 2017?

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Canadian here: the government offers insurance here for bees. It's not particularly profitable, so the gov't had to pick it up as a service.

if it's not profitable, what they should do is raise the premiums, not subsidize it by operating it at a loss.

edit: downvoters:

i'm all for the government running a insurance program if nobody is willing to, but it shouldn't do it at a loss. subsidizing beekeepers distorts the market to the detriment of other crops (that don't need bees for polination) and other polination methods (humans? drones?). it's the same with free roads subsidizing the trucking industry (trucks cause disproportionately more damage to the roads compared to what they pay in taxes) to the detriment of other transportation methods, and low cost flood insurance subsidizing housing in flood zones to the detriment of low risk areas.

I don't think you've thought this through, generally insurance premiums are high if there is a lot of risk and low if there is not much risk. If risk is low and you have a small market, like say beekeepers, your profit is small. If you increase your premiums at this point you would decrease your profits even further because people get insurance based on a calculated trade-off regarding risk and premiums. In other words nobody in a low-risk insurance market is going to buy your policies if they have a high premium.

Why? Does every single human endeavor really need to make a profit for someone? Can it not be possible that the Canadian government feels that a Canada with beekeepers is better than one without, and has chosen to allocate some of its money to make it a little easier to be a beekeeper?

> Does every single human endeavor really need to make a profit for someone?

No, but endeavors that are profitable tend to be more self-sustaining and less fragile and less susceptible to the grace of politicians and special interests.

Note, I'm not saying that markets are the solution to everything, nor am I saying they are the most optimal solution to everything. I just think it's important to consider what you give up when you give up a profitable enterprise.

Not every human endeavor has to make a profit. However, most do have to make a profit, otherwise total wealth decreases until we all starve to death.

If an activity doesn't make a profit, generally people unconnected with it shouldn't be forced to subsidize it unless there is a really good reason, like specific and well-understood positive externalities to the activity.

I have no issue with people doing beekeeping (or skateboarding or painting or snowshoeing) as a hobby. But I see no reason I should be forced to do more work I don't want to do in order that someone else can do their hobby that they do want to do.

It's ironic that you're commenting on bee hive insurance, something that is essential in nearly every kind of food production, by claiming that the state offering it at a loss will lead to everyone starving to death.

If "bee populations are declining, we need bees to make food, we should encourage people to keep bees by limiting the amount of risk they have to take" isn't a really good reason, I don't know what is.

>we should encourage people to keep bees by limiting the amount of risk they have to take

or you know, by the beekeepers charging more for the service. if pollination is really that essential, they shouldn't have any problem getting farmers to accept the price increases. otherwise it's just another subsidy that distorts the marketplace (against other pollination methods, or crops that don't require bee pollination)

You can't possibly be comparing companies subsidized by the government and the critical natural importance of bees. This can't be real.

Honeybees are not native to North America. They actually may have a negative impact on native species.

Not only honey bees polinate crops. In fact there are thousands of bee species around the world and particularly in Brazil, where they produce honey and the european/african honeybees are non-native as well. I think we both can agree that the Amazon and Atlantic jungles and rainforest managed to be polinated just fine without the bees you talk about. When you consider only honeybees you know in North America you are artificially restricting the problem that is much more widespread.

When you plant tens of miles in each direction with a single crop that needs to be pollinated at a specific time there is no way for native insects to pollinate it well. Where would they live? What would they feed on the rest of the time? It’s a green desert most the time then in need of massive pollination for a short, sharp period. Bringing in hives or other forms of pollination is how it gets done and it’s done this way because it works.

so you're saying we should subsidize beekeepers (keeping european honeybees, by the way) as a environmental protection program, because otherwise there's nothing else to pollinate the natural native plants?

Bees are vital to our food production. Is that a big enough positive externality?

It doesn't matter if this is done for profit, for charity or just to irritate the neighbors. Bees are a vital pollinator.

You pay for food. Farmers pay for bees (where they need the bees more than the beekeepers need bee food). Say "it doesn't matter" all you want, but the cost of an input to food production is not an externality.

Food is not just for humans. Bees pollinate plants that other animals consume. Animals that help the ecosystems that we as animals depend on ourselves.

Problem with economics is that not everything can be easily priced. Economics has an inherent flaw where anything that can't be priced is assumed to be $0

Bees provide a service to society, not just to the bee keeper. Why shouldn't society help offset some of the beekeeper's risk?

By that standard, what economic activities would be outside the province of state intervention?

s/intervention/regulation/

Basically anything where the tragedy of commons can result in worse outcomes than where free markets do.

Historically free markets themselves need regulation or collapse into monopoly/cartels.

It's also possibly hard to estimate risk. My understanding is that insurers don't like insuring things they can't confidently assess.

Sounds like a waste of resources to me.

Not everything has to be marketized. I'm absolutely fine with subsidizing things that the market doesn't value properly.

blockchain...something...insurance...something...HoneyCoin!

Please don't post unsubstantive comments here.

You can't always make a market. If the beekeepers and insurers can't agree on a price (premium) that works for both of them, then they won't transact. Here, I think there's too much information asymmetry, with the insured having the upper hand, for it to be profitable for an insurer.

This is probably part of the problem. If the insurance company doesn't have enough knowledge or data on beekeeping, they'll need to charge higher premiums to offset the risk of the unknown.

Also, my understanding of insurance is that there needs to be enough beekeepers that are buying insurance out there to spread the risk around.

"there needs to be enough beekeepers that are buying insurance out there to spread the risk around"

That's not the case. The ones bearing the risk (insurance companies or reinsurers) need to diversify their risks overall but they don't need to do this within risk types.

If you put aside the scale economies of doing the calculations, an insurer would have less overall risk (by which I mean variability in outcomes) if they were to insure one beekeeper, one driver, one baker etc.

No need to have a large beekeeper market from a risk perspective. Maybe from an underwriting efficiency perspective, though.

True about diversifying risk, but most brokers simply guard against the risk of a payout by… taking out an insurance policy from another broker.

Brokers don't bear the risk. Insurers and reinsurers (and Lloyd's syndicates) bear the risk.

Brokers are agents; they aren't a principal in the insurance contract.

Yeah, that’s why they reinsure with another syndicate, like I said.

No. Brokers don't ever carry the risk. So there is no risk for them to reinsure.

I don’t follow. I think brokers have enormous risks of valid claims needing to be paid out, which they hedge by taking out insurance themselves. You seem to be saying the same thing, while claiming that you are saying something else. Could you please try to restate your point in a way that might be clearer to me?

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