[fao_]

This assumes that someone has the time to read full-length legal documents and comprehend them. A task that is difficult for a lawyer, someone who is not only trained, but paid to do such things. It also assumes that the market wouldn't stablize around an equilibrium that is good for the market and the companies, but bad for the individual -- something that frequently happens with regards to loan companies.

[tlb]

For that matter, the current legal system assumes that you have time to read the criminal law.

Presumably, the insurance companies will be strongly motivated to teach their clients how to stay out of trouble.

[fao_]

> Presumably, the insurance companies will be strongly motivated to teach their clients how to stay out of trouble.

Why? If your clients don't stay out of trouble, you get free indentured servants. It seems to me there is incentive to make it harder to stay within the confines of your contract.

[tlb]

In the framework proposed in the article, if an insurer's clients don't stay out of trouble, the insurer has to pay fines on their behalf. If they can't pay their insurance premiums, they become indentured servants until they can.

The indentured servants aren't free and probably aren't profitable. These are people who can't make enough money on the open market to pay their premiums, so it seems unlikely that the workhouse will be able to generate more profit per worker than that. Given that insurance companies will lose money for everyone that converts from paying premiums into a workhouse laborer, they'll be highly motivated to get them back into the real world with a job, modulo the risk of them getting into trouble and causing another fine. So I don't see the incentive you mention to get them to break the contract.