Yeah. You aren't allowed to set up a life insurance policy on someone else's life, or a fire insurance policy on someone else's home. For obvious reasons. But buying an event contract that pays if someone dies or someone's house burns down is fine?
> You aren't allowed to set up a life insurance policy on someone else's life, or a fire insurance policy on someone else's home
This isn't really true. Lots of people take out life insurance on others as a hedge for many reasons, small business partner is one. Same fire insurance, we had a case where someone pledged a building as collateral and we took out separate fire insurance on the building so we'd get paid out immediately.
I'm not sure where this false premise started but alot of people believe it.
This is done because the insurance company wants you to prefer that the covered event doesn’t happen, which avoids some conflicts of interest.
These prediction market events don’t have the usual insurance interests involved.
Yep, we're in full agreement here
Evil, but most everything in real estate is evil.
With an insurance this trick won't work, because the insurance company will notice what you are doing. Polymarket doesn't care.
This has worked well millions of times (and occasionally failed too with people ending in prison or with huge fines). Where I can agree however is that Polymarket makes that much easier.
You can get insurance without the above provisions, but it will cost a lot more. Once in a while someone manages to collect on a claim for loss of their expensive cigars after they smoke them - but this is rare and usually not worth the cost.
This may vary by country, it isn't a subject I'm particularly familiar with, but at least in the UK that isn't true - many, I think most, life insurance policies here do pay out for suicide. There's just a period of years between the start of the policy and when suicide starts to be covered, to prevent people who are planning on killing themselves from being able to take out insurance just before doing so.
if there is evidence that someone took out the policy with the intention of creating a claim then the insurer may treat it as fraud and decline it.
> This is done because the insurance company wants you to prefer that the covered event doesn’t happen
But buying the insurance cancels exactly that. Insurance fraud is a thing.
For example, I have a decently-sized life-insurance policy. If buying insurance "exactly covered that", I would be indifferent to whether I lived or died. But I'm not. And I can't think of a policy-size that would make me so. Money is an imperfect substitute.
Less dramatically, I have really good auto coverage. The car itself is nothing special, and the coverage I have would make me whole (minus a very small deductible) But I am very much not indifferent to replacing the car with money, and it would take way more than the deductible to change my mind on that.
The hassle-value alone would go way over. And hassle-value is usually not insurable.
Insurance fraud is absolutely a thing--but the insurance company still wants you to prefer that the event doesn't happen. That it doesn't work perfectly doesn't really invalidate the point.
You're not allowed to take out life insurance on someone you don't know or have a relationship (business or otherwise) with.
Life insurance on a business partner works. Life insurance on your spouse as well.
Life insurance on the leader of a random country? Unlikely
you dont take out cover on your business partner, the company itself does
It being the driving plot behind Double Indemnity probably started it. I always thought it was true until your comment, too.
If you wanted to correct a misconception, you should provide a better, more complete understanding, not just express frustration about a misconception that doesn't even exist outside of an uncharitable reading.
In this case, that means refining the point to the more accurate model, that you need an insurable interest -- i.e. reason you don't want the event to happen, even knowing you'd get a payout[1]. Your counterexamples only work as such because that exists![2] If you want to fix all the people who don't have your superior understanding, that would have been a great way to help them out.
>I'm not sure where this false premise started but alot of people believe it.
It exists because it's approximately true: you can't get insurance on 99.99999% of buildings in the world because you have no insurable interest in them. And any time someone could correct that false premise, they probably just complain rather than providing the complete understanding -- exactly the choice you just made here.
[1] IMO, this is the natural dividing line between gambling and insurance https://news.ycombinator.com/item?id=13916088
[2] Edit: And in your building collateral example, the policy would prevent you from double dipping -- getting both the building and the full payout.
To be clear they had explicitly written in the contract from the start that death didn't count. And they paid out the full amount - just not to the same betters they would have if he had left office alive.
Any bum defending these contracts is to me either a shill or way too dumb to understand the concept of incentives.
Oh and there was an Israeli journalist that got life threats because he reported that an Iranian missile struck some place in Israel, and apparently there was a huge bet on it on polymarket.
You can sell your life insurance policy to somebody else. It's a way of getting money to sick people to use while thy are still alive.
Polymarket is facilitating bets between people, not bets with the house. Gambling and insurance are both bets with the house.
Yes, there are de minimis exceptions. Your office NCAA pool, for example, is often legal, but it has nothing to do with what we're talking about and is also irrelevant to a business facilitating it via 18 U.S.C. § 1955.
https://russpain.com/en/news-3/authorities-consider-legalizi...
>Rarely exceed 25 euros.
Maybe in Christmas, because the weekly play was just about low prizes.
What jurisdiction are we painting with that broad brush? This is far from universally true, even in the US.
A bet is a bet, whether it's against the house or other people it's a bet.