Insurance is an interesting game. Essentially it’s an activity of risk  management: attempting to find things of concern to a large number of people that are relatively improbable. The gap between the insurance premiums and the payouts is the profit margin, and at the core of the whole proposition is the unknown risk. As a general rule if you can afford the cover, whatever it is that you are protecting yourself against is fairly unlikely to happen. That’s why the elderly struggle to find private health cover, and people living in hurricane belts and on seismic fault lines find their insurance from State rather than private sources.

Which gets me wondering. As the volume of data available to actuaries to calculate risk increases, will the industry eat itself? If predicting events becomes increasingly reliable through “big data” will we just get to a point where if you can afford it, it’s not worth it? For example, will the selling of NHS data, as recently reported, actually in the long term increase the need for state-provided health insurance? Oh, the irony…

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