The Marginal Revolution Podcast The Economics of Insurance
19 snips
Nov 19, 2024 Delve into the trillion-dollar insurance industry and its surprising impact on modern economies. Explore the evolution of life insurance and how societal perceptions shifted from repulsion to moral imperative. Discover the role of advanced mathematics in shaping insurance practices and the implications of moral hazard. Uncover historical practices from tontines to mutual aid in rural communities, and examine why certain risks are insured while others are overlooked. This conversation reveals how insurance reflects our attempts to navigate uncertainty.
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Insurance Industry Size
- The U.S. insurance industry is a massive $1.4 trillion market, representing 6% of GDP.
- It primarily transfers money from many small contributors to cover large losses of a few.
Insurance as Transaction Enabler
- Insurance has a significant benefit in enabling transactions, like home sales or maritime shipping.
- It simplifies processes and creates more liquid markets by mitigating risk.
Barbon and Fire Insurance
- Nicholas Barbon founded the first fire insurance company in London in 1680.
- He also created a private fire brigade to protect insured properties, demonstrating an understanding of moral hazard.
