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by lukecampbell
4610 days ago
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I'm not an actuary so I probably can't accurately attest to this, but I would think it would still be a feasible approach. If an insurance agency were to accept the risk, they would have to do their homework and have their lawyers and agents dig through the intellectual property of their clients and do their own determination at the risk of legal troubles and charge the client(s) a fee which yielded profit over a span of time where the mean loss was less than the income. |
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I think one key problem around insuring these risks is that it'd be difficult to price and value. To price/value you need to understand the cashflows for the insurance product in terms of premiums and payouts. Life, Health and General insurance all have analytical methods that rely on historical data to determine the likely-hood of a payout. For this type of insurance there isn't the same level of historical data.
Also, the regulatory regime for insurance companies is moving towards a risk/shock based approach - this is the case in Europe (or will be eventually), with the ROW expected by the industry to follow similar approaches. So for an insurance product such as this, an insurer would probably need to understand what happens if the level of payout incidence is stressed (say doubled) - given that the incidence of payout isn't well understood and the liability when you do payout is likely to be quite high, would result in what the market would probably consider to be an expensive product.