It seems plausible to me that creditworthy institutions/individuals should not have to take out car insurance. If Oxford faced a potential liability in the billions, I’m sure it would insure. I guess the main threat comes from small, limited liability institutions whose only purpose is to do this one kind of research, and are thus unconcerned with the downside. Or large institutions with poor internal governance.
I agree that in general it’s fine for creditworthy institutions to self-insure. The issue is that the scale of possible liability is large enough (billions of dollars, perhaps hundreds of billions of dollars) that even institutions which routinely self-insure against all risks as a matter of course may not be creditworthy against the worst outcomes. In some cases they are explicitly or implicitly state-backed, but if nobody in the chain has considered the possible liability you don’t get the proper incentive effects. If there were a market so that the risk of the research were priced, I’d expect better governance even at institutions which self-insured.
I agree that in general it’s fine for creditworthy institutions to self-insure. The issue is that the scale of possible liability is large enough (billions of dollars, perhaps hundreds of billions of dollars) that even institutions which routinely self-insure against all risks as a matter of course may not be creditworthy against the worst outcomes. In some cases they are explicitly or implicitly state-backed, but if nobody in the chain has considered the possible liability you don’t get the proper incentive effects. If there were a market so that the risk of the research were priced, I’d expect better governance even at institutions which self-insured.
I agree.