I worry about the “that will never happen” effect. Mandating that researchers take out the insurance prevents it being dismissed on that front, but how do we make the insurance agencies take it seriously?
It seems all too plausible that the insurer will just say “this will never happen, and if it does it will be unusual enough that we can probably hold the whole thing up in court—just give them a random number”. For a big enough risk, if it happens then the insurer might expect to cease to exist in the upheaval, which also doesn’t give them much incentive to give a good estimate.
In general, I’m not sure whether insurers are quite robust enough institutions to be likely to have rational decision procedures over risks that are this big and unlikely.
I agree that the process isn’t going to be perfect. But the relevant question is whether it’s sufficiently better than the status quo.
For what it’s worth, I think the insurers may be more likely to over-hedge and only offer insurance at unreasonably high prices. That might be less of a problem (or it might make this whole thing politically infeasible).
I worry about the “that will never happen” effect. Mandating that researchers take out the insurance prevents it being dismissed on that front, but how do we make the insurance agencies take it seriously?
It seems all too plausible that the insurer will just say “this will never happen, and if it does it will be unusual enough that we can probably hold the whole thing up in court—just give them a random number”. For a big enough risk, if it happens then the insurer might expect to cease to exist in the upheaval, which also doesn’t give them much incentive to give a good estimate.
In general, I’m not sure whether insurers are quite robust enough institutions to be likely to have rational decision procedures over risks that are this big and unlikely.
This is why the reinsurance market exists.
I agree that the process isn’t going to be perfect. But the relevant question is whether it’s sufficiently better than the status quo.
For what it’s worth, I think the insurers may be more likely to over-hedge and only offer insurance at unreasonably high prices. That might be less of a problem (or it might make this whole thing politically infeasible).