All three of these takes are pretty basic in their extreme ("we shall see (in court)," "capitalism," and "as long as the law absolves specifically me and people I like." Let's just play it out:

- Did she break some laws? Probably, and whoever broke the law most clearly will lose in court. We'll see what the judge says. Not sure if judges in China are impartial.

- But if she went to court, the insurance company is pretty rich so it will win. Also this is China. As a matter of who should win...

- I will never be an insurance company, even if I sometimes would like cheaper insurance I will never be on the wrong side of justice here, they're a bunch of scoundrels. What about all the ways they rob me?

Here you go, that's every legal perspective you're going to hear, from a commenter or journalist or whatever. Obviously what we want to know is HOW she did it.

If a hedge fund profits from predicting a corporate merger by tracking corporate jet flights, many people would say that's just them doing their research and being well informed. It's just obscure information, not insider information.

If this woman were trading flight insurance in the type of investment market that trades sophisticated insurance products like credit default swaps, her actions would be completely fair.

That she was doing it with retail products is less ideal, but not enough to clearly condemn her.

See also: the tax code. An accountant is just someone who rips off the government for you, to stop the government ripping you off so much. Because that's the game that's being played, as agreed by all players.

I've interacted enough with privatized insurance companies that if insurance wasn't a requirement or near requirement, I'd happily choose other options of mitigating risk. I much prefer self-insuring when feasible.

In a democratic country the law is supposed to be made by democratic process.

If you feel wronged, pillaging shops is not the way to solve it. The way to solve it is to get informed about what democracy is and cast your votes to get represented by people who will defend and strengthen democratic process.

Instead, what happens is people do not put enough or any due dilligence when casting their vote and the country gets represented by people who don't care about democratic process and only care about their partisan interests.

Get some good laws to make sure the best way to be profitable is to do good to your customers. Let's not be naive that trying to rip off the insurance company is an attempt to alleviate any of current problems (except for personal budget problems).

This is a lot like the difference between tax evasion (breaking letter of the law) and tax avoidance (breaking the spirit of the law).

It's also arguable that hedge funds exist to arbitrage the difference between the spirit of contractual arrangements (thou shalt not use pension funds to take out massive loans) and the letter of contractual arrangements (god only knows what you can and can't do with the company pension fund, but you can probably bribe the prosecutor to agree with you).

So, it's normal business practice for businesses and the wealthy to rip others off. The difference between them and us is they have better lawyers and are able to bribe prosecutors who have a different interpretation of the letter of the law.

Better laws are not going to level this playing field because the problem is largely how we practice law and all major parties support the status quo.

So while I agree with you in principle, this approach is insufficient.

> If you feel wronged, pillaging shops is not the way to solve it.

Sometimes, it is. For groups of people with little to no political power, protesting, rioting, and causing a bunch of social upheaval is definitely a productive way to force other people to consider and address their grievances. There are a lot of negative tradeoffs, of course, but there's no denying that it's an effective way to raise awareness.

Otherwise, we wouldn't even be having this discussion.

> "she was able to receive relevant information beforehand that tells her if the flight was going to be delayed or cancelled. Thereafter, she would purchase the tickets to the flights that are likely to be delayed or cancelled, before checking if there is any extreme weather along the route the flight is going to take that day."

Specifically, I'm not sure what the "before checking for extreme weather along the route" bit is supposed to mean, especially since it seems to imply that she checked for extreme weather after she already purchased the insurance? Something is odd with the grammar here. Furthermore, the quote never specifies what the "relevant information" actually was.

So... does this mean that she received inside information (e.g., from a former coworker) that the flight had been cancelled?

Or does it mean that she was looking at publicly-available information (e.g., weather data) to make the call?

I think the ethics and usefulness of some aspect of this are dependent on the answer to that question, and I'm not sure the article says definitively one way or another.

With that being said, I think the ethical problems with the fake identities seem more clear...

Google Flights will warn you if a flight is often delayed -- does that count as "receiv(ing) relevant information beforehand"?

The travel insurance wouldn't pay out if the flight was cancelled due to weather that was already known about.

Well, from the description of the events, it sounds like she didn't "know" the events were happen, just that they were more likely in a way that's not captured with a sufficient premium. That's not the same as e.g. insuring against your car getting dented, knowing you plan to dent it.

So what she did was more analogous to reasoning that, "Oh, man, people always seem to rear-end you when you're driving a red sports car. Since I drive one, I guess I'll pay extra for the no-deductible option for accidents involving getting rear-ended." She doesn't know she'll be one to get rear-ended, she didn't cause the rear-ending, she just recognizes it as being super-likely and thus a good deal.

With that said, I think there is a sense in which this is fraud. Generally, insurance requires you to have an "insurable interest" -- i.e. independent reason to value the insured thing -- to prevent the kind of asymmetric info/moral hazard situation that breaks their ability to model the risk and which leads to cases like this.

So the contract almost certainly had a clause like, "I am going on this flight for business or pleasure reasons" (or something more lawyer-screened). That would establish the insurable interest: the insured wants to go on this trip, and wants it to go well. So she'd be entering the contract on fraudulent terms if she bought the trips/insurance solely to profit off the payouts.

Still, I have to agree with the OP's comment. If someone is this good at assessing risk, you should hire them to tune your risk model. She did pretty darn good with far less info than the insurer had to work with!

I don't think that is a strong enough statement. She used multiple identities in attempt to keep police off of her trail. The analogy to the red sports car is helpful but lacking in this obviously nefarious effort in its innocence.

If you do well enough at a Casino, they can ask you to leave, and ban you from the premises, even if you're not doing anything illegal.

Only if the information she was using was non-public, e.g. if she were getting information from former colleagues, or had access to such data herself that a normal person would not have. Otherwise, it is not comparable to insider trading.

Is it though? Isn't this just arbitrage based on asymmetrical information (i.e. exactly what insurance companies do)? If she caused the flight to be delayed somehow, that would certainly be fraud, but so would anything the insurance company did to make the delay less likely without adjusting premiums.

Failure to disclose material facts renders the contract voidable. Insurance is not supposed to be a method for exploiting information arbitrage, and the law is formed explicitly on that basis.

It doesn't mean there can't be robust discussions about what the contract covers when particularly unexpected sets of facts come up.

She had to use 20 different identities do to this. That should answer your question.

The question wasn't "is this particular case fraudulent for any reason what-so-ever".

The question was "is buying insurance on something you already know is going to happen" plain and simple fraud?

The identity fraud isn't really relevant to that question at all.

FWIW I'm not aware of any law in the USA that makes it illegal to buy insurance when you know the policy will pay. Knowing more than the insurance company's actuaries is not fraud. Making false statements is fraud. Intentionally causing damage to collect insurance payments is fraud. But the hypothetical oracle who knows when the next flood/fire/car accident will hit due to divine inspiration is free to buy a relevant insurance policy the day before. AFAIK.

The insured has a duty to disclose everything that is or would be material to the insurer, even if that information is known only to the insured.

Fraud is entirely separate.

I wrote a super long comment below, but on a more fundamental level... how?

Especially for something like travel insurance. Anyone the average consumer gets to talk to about a travel insurance policy is going to be some call center jockey being paid on commission.

In fact, my insurance agent sold me a home insurance add-on for personal electronics. Their pricing didn't take into account the cost of the covered electronics. Replaced some very expensive hardware after (inevitable) failures. When I purchased the policy, I sent my agent and email pointing out that I has some super expensive electronics, expected short shelf life, and was pretty damn certain that the policy had positive expected value.

The agent straight up asked why I wouldn't buy the policy in that case!

That product was discontinued, of course. The insurance company tried to claw back one of their payments until I showed them my emails with their agent. But the fact that they even tried is... telling. And I'm just lucky they didn't press the issue, because I probably wouldn't have bothered going to court over a few hundred dollars in wasted payments.

There's a fundamental problem with trying to apply this sort of legal doctrine when most consumers are unsophisticated and don't have access to the same data as the insurer. The fact that we only ever get to talk to sales people compounds the problem.

a) I have a really, really, REALLY hard time understanding how hiring an army of PhDs to build highly proprietary risk models based on extremely expensive (or not-even-for-sale) datasets does not run a foul of uberrima fides. The doctrine only makes sense if it forbids both parties, not just the insured, from concealing information. If I were on a jury and the entire case hung on a reasonable man's interpretation of uberrima fides, I would have a hard time ever finding in favor of a modern insurer who's unwilling to share their models and data with the world. I mean, I might agree that the insured hid information. But I'd be nearly 100% confident that the insurer hid information.

Maybe in 1766 this principle made sense. It aint 1766 anymore.

b) In this case specifically, it would be quite hard to convince me that using publicly available information (e.g., weather reports and history of on time / delayed / cancelled flights) runs a foul of uberrima fides. You can't honestly expect me to believe the insurance company didn't have access to that information. It's equally hard for me to believe that an army of PhD actuaries didn't think to use that information to build their pricing models.

c) In the case of travel insurance, the doctrine has a really big bright-line problem. When I buy any ticket into or out of Boston during the winter months, I tend to buy travel insurance. I never buy travel insurance for flights into or out of Boston in the summer. That is clearly not fraud (or, if it is, that insurance product needs to be regulated out of existence). Now, what if I choose particular weeks? days? Where's the bright line?

d) Even supposing some obligation to share information, how in God's name am I supposed to inform the insurer that I estimate a flight will be almost surely be cancelled/delayed? Call up the 1-800 number? Because I know exactly how that would go: you'd get a first-line support person who's incentivized to sell policies. If I were running a similar scheme, I would definitely record myself calling up the insurance provider and point-blank stating "I think this flight will be cancelled, should I buy your insurance?" I guarantee the answer from the T1 support folks would be "yes, that's what it's for!". It seems totally unreasonable to assume bad faith of anyone who buys an insurance product with large positive expected value, especially when the insurance company is consistently making 10 figures in net income and is unwilling to engage in individual dialogs about "who knows what and when". If I can't get on the phone and talk to the actuary who built the pricing model to figure out if X is shared information, and if there's no list of check-boxes for me to look through in order to determine the same, and if the only company representative I can get access to is probably going to explicitly tell me to buy the policy, then... what the hell?

All of these things taken together: if I were on a jury and uberrima fides was the only reason to find in favor of the insurer, I would certainly do everything I could to sway my fellow jurors toward favoring the insured.

It seems like the right solution here is either a) more sophisticated pricing models, or b) some very clear and well-dilineated bounds on what information is/is not allowed to be used when purchasing travel insurance.

TL;DR: uberrima fides as a fuzzy legal doctrine seems... just... utterly impossible to apply to consumers. The relationship is fundamentally asymmetric, so the insurer should have a burden to explicitly ask about any relevant information (as is done for, e.g., health and life products). As a fuzzy doctrine for deciding on a case-by-case basis, this doctrine seems more relevant when the insurer and insured are more symmetric (e.g., insurance products aimed at large corporations, reinsurance, etc.).

(Of course identity fraud is a problem and this happened in China which doesn't use the same legal system, so this is all just a hypothetical conversation.)

Especially point A.

I used to work for a company that made health insurance claims benefit management software for first and third party administrators.

We would get requests from clients to do data mining in our databases that was well in excess of what was legal - one example included the fact that they were using genealogy services to build family trees and while they couldn't mine DNA for familial information, surely there was no harm in looking over your distant relatives for diagnosis codes, right?

"We can't do that".

"Why not, it's all in the databases, right?"

To the OP's point, that would oblige the traveler to notify their insurance if they got a text from the airline advising of delays, etc.

I'm extraordinarily jaded, but I'm fairly certain that one of the points of funding https://en.wikipedia.org/wiki/Federated_learning research is to side-step regulations in the finance and insurance industries.

Fortunately, in the US, laws about such things are quite strong at the moment. Stay tuned...

I don’t think that’s quite the right definition. I know I’m going to die. I bought whole life insurance. I have not committed fraud.

So technically you bought life assurance.

Perhaps consumer products are playing fast and loose with the technical terms because everyone says they want "insurance".

...but where there is a legal requirement for everyone in the area to "get insured" so that they don't have to lean on FEMA, and therefore in practice there's the opposite effect to the distribution of risk under public healthcare: rather than forcing healthy people who will get negligible benefit from their policies to get insured, such a requirement forces the insurance company to not be playing the lottery by offering only short-term policies that can maybe avoid a flood, but instead fixes them into always ending up covering a resulting flood (and therefore almost always defaulting in such cases and needing reinsurance coverage.)

While it sounds like insider trading, the situation here is quite a bit different. With insider trading, the company has very real and legitimate interest to keep some information private. Private from the general public, including their competition.

In this case, however, the airlines wouldn't have to share this info, apparently known inside the organization, with the general public, but with a single (set of) well defined actor(s). Also, I'm not 100% sure if publishing all the available information on possible delays and cancellations wouldn't benefit their business. (Though, if cancellations happen because of say not enough tickets sold for a flight, it may, because maybe that would induce a self-reinforcing process. Who would want to buy a ticket that is likely to be cancelled?)

If the pricing on insurance isn't dynamic, and gets within the weather window, you can use a 3-day prediction to place a high-likelihood bet that the flight will be cancelled.

Particularly if the insurance sticks with the ticket such that it can be moved if unused.

1. See a bad storm coming in.

2. Buy a fully refundable ticket for the day the storm is going to hit.

3. Buy insurance on that ticket.

4. Storm hits? Cash in.

5. Storm doesn't hit? Change the date on the ticket and the insurance moves with it.

what's the statute, or regulation, please. i'm not aware of that.

I fail to see how this is in any way fraudulent.

> In insider trading, famously, nobody quite knows what “legal” means. There is no statute defining or prohibiting insider trading, and the Securities and Exchange Commission rules on it are slim. But there are some judicially created rules that more or less make sense, that focus, roughly speaking, on whether insiders are using someone else’s information for their own gain. (A question that has nothing to do with market fairness, by the way.) But those rules are hazy and much disputed, and they aren’t written down in one place.

https://www.bloomberg.com/opinion/articles/2018-10-15/inside...

When a company employee is told something that's a secret and they trade on it or tell someone else then that's betraying that trust. If someone outside the firm figures it out, say from satellite photos or something like that, then it's not.

But why would I ever invest in a company if I knew that my gains would be stolen by people with secret knowledge?

If you allow insider trading, then you eliminate the incentive for outsider investing

And that means that we don't have public companies, only private companies.

Another way to think of it is that it creates an incentive for corporate espionage, so that outsiders may gain insider information.

In a world where corporate espionage is not itself illegal, the market would then be composed of private companies plus external "auditors" who are slipped in by all interested shareholders whether the private companies like it or not.

...which is oddly similar to governments performing intelligence on allies.

at that point of sale, the reality is the product sucks. but the market still reflects the price of a good product. so they know reality before everyone else, keep everyone else in fantasy, and trade at the fantasy price.

it further undermines the market bc no one will invest in companies who bail out with at the high price and leave them holding the bag. e.g. if someone asked me to buy 1k shares @ $100 each and i buy them: the product is a dud in R&D. the insiders all sell near the $100 price, the product is a dud in the market, share prices tanks to $30.

Next my "friend" asks me to invest I tell him to pound sand.

Better cancel all life insurance policies then.

Buying insurance on something you're going to cause to happen (cut down a tree so it falls on your car, leave flammable substances in a hazardous place in your home) is fraud.

Buying insurance on things you think are likely to happen isn't inherently fraud.

Or else it's a tax scheme where you only profit based on the tax-free nature of life insurance proceeds.

Do you have a citation for that law?

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Yes, weather matters, and people can benefit by predicting it.