Comment by happertiger | Hacker News Reader

Comment by happertiger | Hacker News Reader

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With all respect I don’t see how this changes anything but shifting who pays.

How is it better to pool risks to the group rather than the individual paying a for that risk? The US already has a huge problem with coastal real estate and federal insurance of coastal developments. Why would we introduce that at scale?

Why should the collective pay for individual choices? It’s not like the society got together and made people move into fire prone areas.

I am not trying to draw parallels to health insurance which has many ethical questions that drive deep consideration, but I don’t understand why asking for the group to insure individual risk that is fundamentally founded in individual choice is in any way necessarily better?

  How is it better to pool risks to the group rather
  than the individual paying a for that risk?

Imagine a population of 10,000 people, 1000 live in fire-prone areas, and 10 will have their $100,000 house destroyed by a wildfire for a total cost of $1,000,000.

(1) If the state pays for wildfire damage, the 10000 people will pay $100 each whether they're in a fire-prone area or not.

(2) With home insurance including wildfire insurance, insurers set individual premiums based on their best risk models, and the 1000 people in fire-prone areas will pay $1000 each, whether their home burns down or not.

(3). If there is neither (1) nor (2), the 10 people whose houses were destroyed will pay $100,000 each.

Some people would say that (2) is the morally correct level of cost distribution, as (1) unfairly subsidises risky behaviour, while (3) bankrupts disaster victims at random.

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