[Braxton1980]

Doesn't insurance normally work by protecting rare instances whose cost is amortized over the base?

This would be a claim by a large amount of insurance clients at once

[jameslk]

A sudden claim against many should be priced into the cost of the insurance, offset by some risk adjustment. The goal is ultimately price stability, if the price is not too high (that’s the unknown)

[lazide]

Insurance tends to do really badly in ‘black swan’ type situations. Which pretty much are what Trump is doing.

[jameslk]

Isn’t the point of insurance to provide protection against black swan events? If it’s more likely to happen then it’s not really a black swan?

[lazide]

No [https://en.m.wikipedia.org/wiki/Black_swan_theory].

It’s the difference between getting cancer (calculable, but perhaps not high probability), and getting hit by a meteorite (not actually calculable, very severe consequence).

[adgjlsfhk1]

insurance is best for individually unlikely but societally likely items. otherwise pricing it is really hard.

[hdgvhicv]

Fire burns your house down, insurance is easy.

Asteroid hits New York, insurance won’t pay out.

[lazide]

Or in many of these scenarios, can’t pay out, because they’re bankrupt. The biggest issue with black swan events (in the proper usage) is everyone is screwed because no one saw it coming and/or it’s so widespread no one can do anything about it for individuals.

[JumpCrisscross]

> would be a claim by a large amount of insurance clients at once

You’d insure against a specific product from a specific country being hit with a tariff. Tariffs are going up and down, sometimes in a way that may as well be random. (India not recommending Trump for a Nobel prize.) On its face, this doesn’t seem uninsurable.