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Comment by arn3n | Hacker News Reader

I've always thought that ethically "right" forms of insurance (and other financial products, like equities, futures, etc.) is that they should enable individuals to take actions that are riskier than they would normally be able to, without unduly increasing the aggregate risk of the entire system. Of course, this is 1. Hard to measure and 2. Hard to define "unduly". For example, I believe mortgages are a "good" financial instrument, because they enable people to have homes and roofs over their head without introducing systemic risk... except when done in 2008. The devil is in the details and the implementation, I suppose.

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> I've always thought that ethically "right" forms of insurance (and other financial products, like equities, futures, etc.) is that they should enable individuals to take actions that are riskier than they would normally be able to, without unduly increasing the aggregate risk of the entire system.

What are some examples of an "ethically right" insurance product?

One example that the article gave is how Ghanan farmers couldn't risk to expand or specialize their crops because of the risk of drought. That feels like a need that could viably be met with sensible insurance.

One form of insurance I've always been a fan of in the US, at least, is mandatory car insurance. Considering that the cost of a collision can be extraordinarily high for all parties involved, but because most people don't crash, amortizing that risk out among drivers enables more people to get vehicles and transportation without freak accidents putting people into financial distress.

The mandatory insurance is for your liability if you damage other people’s property. (If you have financed the car, you likely also have to insure your own car against collision and other damages, but that’s a condition of the financing, not a law.)

We were hit from behind in a car that we did not carry collision insurance on. The at-fault driver is responsible for the repairs and they have mandated insurance to cover that.

Or simply building fire insurance, so you’re not massively in the hole with no collateral if your house burns down. Which is why lenders require a house to at least be fire insured in my market, as a condition of the mortgage.

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