That is great, they are by definition a net negative on the economy as a whole? You shouldn't gamble on your own health.
That, in fact, is the general (and beneficial) function of insurance: You only need to provision for the expected loss (plus some fee for the insurance), not the maximum loss (which many people could not afford).
Suppose you want to insure your home against fire, which could create damage of say $1m with probability 0.1%.
Without insurance, you'd have to put aside savings of $1m (the maximum loss), that would remain untouched with 99.9% probability, and be used to cover the fire damage otherwise.
With insurance, you'd pay the insurer $1m * 0.1% = $1000, plus a bit on top to cover their cost and profit. In case of fire, they cover your loss. Everyone wins.
So, with insurance you replace provisioning for the maximum loss by provisioning for the expected loss plus a fee.
(That's why one should not get insurance for small items (where one can cover the max), such as baggage or mobile phones or so, but for large items, such as house, life, health).
Similarly, I can't really understand insuring against expenditures that are certain. Eg insuring for the cost of routine pregnancy (as opposed to insuring for complications only). Or even worse: yearly allowances like 100 dollars flat for new glasses: just decrease my insurance premiums by that 100 dollars, please. (Unless it's a tax dodge, then it makes sense.)
It's not a gamble, you transfer your risk to a collective.
The 'collective' part is a distraction when trying to understand insurance.
Similar for insurance to work you don't need to have a group of people who are in the same situation as you: in principle an insurer can work out the risks, even if you are in a unique situation.
It's just that working these things out costs time and money, so it's cheaper for you, if you are like everyone else.
But eg if you are a famous singer, you can insure your voice just fine. Companies also regularly purchase insurance against customers winning prizes. See https://en.wikipedia.org/wiki/Prize_indemnity_insurance
I'd argue that it should be illegal again, as a moral hazard (directly contributing to countless murders and other schemes) and as a particularly morbid form of gambling.
Do you have any data on how much of a problem that is?
But it's enough of a problem that there are quite a lot of legal journal articles about it, e.g.: https://scholarship.law.campbell.edu/cgi/viewcontent.cgi?art...
Life insurance has killed a lot of people. People who would otherwise be alive but for the existence of payouts upon their deaths.
If I sign up for a big life insurance, those guys better give me a body guard and a food sniffer to protect themselves from a big payout.