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Comment by matte_black | Hacker News Reader

Aw great, this is only going to cause MORE kidnappings since thieves will know they can get insurance money.

Before K&R insurers got together, firms and wealthy families were paying badly negotiated sky high ransoms. Now professionals negotiators with ice running through their veins negotiate much better "deals" and also reduce the risk of death by two thirds.

Much lower ransoms should mean kidnapping is less profitable and so supply should decrease (of kidnappings).

if no one paid, there would be no more kidnappings for ransom

People are inclined to pay ransoms, so you would have to make it illegal to pay ransom, which would make a disincentive to reporting kidnappings to the police as kidnappers want.

Interestingly in US paying the ransom was illegal, nowadays they are reverting that, since it was highly problematic and resulted to more deaths for the hostages, and longer hostage times. And in the end the ransom often still was paid.

My source (which I have been pasting here already 3 times): https://www.npr.org/sections/money/2017/09/01/548032302/epis...

The kidnappers can remain irrational longer than you can stay solvent.

Maybe something like the Russian model makes more sense, if not legally. The most deterrent response is to hunt the kidnapers down and exterminate them, not pay them.

Sounds like a great way to get the hostages killed at the same time.

Maybe it would work _after_ the kidnappers have been paid.

But if the hostage takers are dead and other potential hostage taker know this, it would reduce the risk?

Which is great and all, except now your family member is dead, which I’m sure matters more to you than some game theory.

The result of which is everyone is at more risk, including your family in the future.

To the family members, it matters. From the viewpoint of the governement, I'd say it makes sense.

Marvelous.

If no one undercut, prices for all goods could remain artificially high. Yet, the incentive for the individual firm (and the individual's loved ones, in this case) is to undercut (or pay). An insurance market provides (a) expert knowledge that keeps the price down, (b) an incentivized group that may be able to affect the likelihood of the insured event, (c) a group to provide financial incentives against risky behaviors, thereby pricing behaviors into the market in the same way motorcycle insurance or certain risky living arrangements get priced into the market via their insurers.

True, but nobody is going to not pay and sacrifice their life so that hypothetical future people won't get kidnapped.

This might not be true: https://www.npr.org/sections/money/2017/09/01/548032302/epis...

Who would ever not pay their own ransom?

Well Getty famously didn't want to pay his grandsons!

How many of your own family members would you be prepared to sacrifice towards that principle?

That is not true. Past performance does not predict the stupidity of horrible peoples future actions.

I believe that's the policy that Israel applied with success.

And if the insurance companies are limited to a % of paid claims... then they are incentivised to increase the payout and/or # kidnappings. That's a recipe for disaster just like the medical market.

The insurers have been paid in advance. They pay the ransom from their coffers, so are incentivised to reduce the cost as well as keep customers (not fuck to the recovery).

But then interests aren’t aligned. What if the insurance company denies your claim?

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