Upvoted. But there's a difference - the arsonist is only allowed to get an insurance policy on buildings he owns.
It's more like an arsonist taking out insurance policies on other people's buildings, THEN burning them down.
Except we don't allow crazy antics like that with insurance. And the insurance companies have to keep money reserved to pay out claims. And it has to go on their balance books.
So what we have here is "a building just burned! Oh crap, who has insurance on that? Who sold it? Who's going to go broke? Who shouldn't we lend money to? Nobody knows!"
Or, while we're on the analogy train, a doctor taking out a $MM life insurance policy on a terminal patient before he performs an operation (which will in no way help the patient live longer), collecting the patient's health insurance dollars along the way.
It's more like an arsonist taking out insurance policies on other people's buildings, THEN burning them down.
Except we don't allow crazy antics like that with insurance. And the insurance companies have to keep money reserved to pay out claims. And it has to go on their balance books.
So what we have here is "a building just burned! Oh crap, who has insurance on that? Who sold it? Who's going to go broke? Who shouldn't we lend money to? Nobody knows!"