mitigatedchaos said: maybe but if we care about offsetting risks and pricing them in, then by putting insurance we set a more market-based assessment of that
in theory yes, although in practice it just lifts the regulation up one level to apply to the insurance company instead.
Not so!
It lifts some of the regulation up one level to apply to the insurance company!
The difference between being regulated by the state and being regulated by an insurance company is the profit motive: I am going to apply for the insurance that is the cheapest for me, in combined fee-to-insurer and time-spent-on-paperwork.
This encourages the insurance companies to find the most efficient level of regulation, because if it is inefficiently high, they will lose customers, and if it is inefficiently low, they will lose money when their customers customers get sick.
I mean the state typically regulates the insurance industry very closely, to the extent of issuing specific terminology they have to use in contracts
“The state ruins everything, news at 11.”
Obviously nothing* can be done about the state inserting itself to actively ruin value when it doesn’t get punished for ruining value. Read the text more like if you, yourself, were a government official concerned with making the world a better place. You can regulate directly, or you can find some different method - enforce strict liability on restaurants (but then you’d have the inefficiency of lawsuits) or require a bond posted for accident payments (but then…) or you can just require people to have insurance and get out of the way.
*If you disagree, see me behind the tescos at 11, bring a canister of gasoline.
ah instead of the state micromanaging the insurance companies it should just mandate that they need to take out policies from a meta-insurance company!
Also don’t forget that insurance companies will try to sneakily cut out items from the insurance coverage that we wanted to cover the risk in the first place. We want to exclude lesser insurance policies, which is why insurance was mandated to begin with. In this case my motive was not the pure efficiency of the market, but to accurately price risk and put it on the bill, among other things.