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A comment on Woman makes $420k by buying insurance on flights she predicted would get delayed. Parent comment

Re:Woman makes $420k by buying insurance on flights she pred... by yellowstuff on Monday June 15, 2020 @07:06AM (#23526072)
You're right in some particulars, both gambling and insurance let customers enter transactions with an uncertain payoff that favors the house, and both are relatively aggressive legally when customers try to get an edge.

But the purpose of healthy gambling is to have fun, and the purpose of insurance is to pay a small amount in most future states of the world to avoid very bad outcomes in some future states of the world. These are both reasonable things to spend money on, but they're very different objectives.

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Re:Woman makes $420k by buying insurance on flights she pred... by MaxBarraclough on Monday June 15, 2020 @07:22AM (#23526167)
Agreed. Insurance will always look somewhat like gambling, by its very definition, but its role is very different. Someone did a better job of estimating odds than an insurance company did. They then defrauded the insurance company, using fake identities, and were discovered and arrested. This doesn't delegitimise the idea of insurance in the slightest.

If the person hadn't used false identities, but had still been arrested, that would be a more interesting case (more analogous to legal professional gambling). When false identities are used, it's clearly not above board.

I would assume that in such a case, the insurance company could refer to their terms-and-conditions, and then contest their obligation to pay out. I don't imagine it would be a criminal matter though. (Needless to say I'm not a lawyer.)

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Re:Woman makes $420k by buying insurance on flights she pred... by chii on Monday June 15, 2020 @07:36AM (#23526247)
> Someone did a better job of estimating odds than an insurance company did. They then defrauded the insurance company

how come it's not fraud when insurance companies calculate the odds better than you, and yet it is fraud when you do it to the insurance companies?

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Re:Woman makes $420k by buying insurance on flights she pred... by ascorbic on Monday June 15, 2020 @07:45AM (#23526306)
Because you're not buying it to win money. You're buying it to limit downside loss, because aside from the massively wealthy, we are loss averse. It's worth our while to pay $200 to insure against a 1% chance of losing $10000, even though in purely probabilistic terms that's a bad deal, because most people can't afford an unexpected expense that large. Even people who can afford that, it's still more painful to lose it than to have a 99% chance of having wasted $100. The larger the potential downside, the bigger the incentive to insure against it, even when it's a bad deal.
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Re:Woman makes $420k by buying insurance on flights she pred... by Supermancho on Monday June 15, 2020 @08:14AM (#23526493)
> Because you're not buying it to win money.

There is no win or lose, if insurance is not gambling. If it is, then either side wins money with varying payout schedules.

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Re:Woman makes $420k by buying insurance on flights she pred... by foota on Monday June 15, 2020 @08:01AM (#23526415)
It's not. It's fraud when you lie about it.
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Re:Woman makes $420k by buying insurance on flights she pred... by saalweachter on Monday June 15, 2020 @08:55AM (#23526778)
> Someone did a better job of estimating odds than an insurance company did.

Eh, I'm not sure that's really true, even.

Flight insurance -- at least, all of the flight insurance I'm familiar with -- is a fixed-cost product. I doubt it is so much that the insurance company couldn't create separate risk pools, from their own analysis, but that it doesn't make sense as a business.

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