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"Shouldn't the buyer of an insurance make sure that they are getting their money's worth?"

That's similar to placing the responsibility on the buyer of a gallon of milk to make sure it has not been poisoned.



Is it? Poisoned milk is not the same as milk, so selling poisoned milk as milk would be fraud (among other things). Of course fraud should be illegal. But it should be possible to sell something that has risk attached. Of course claiming it has no risk would be fraud again, but I think that would be covered with current laws.


"Of course fraud should be illegal."

This applies very well to the insurance business. If you are promising to pay a certain amount if a certain event happens, then it turns out you did not actually put away any money to pay out, that's a pretty straightforward case of fraud.

With milk, the government has decided to put processes in place to keep milk that could sicken or kill people off the shelf, instead of just letting the survivors of people killed by poisoned milk sue after the fact. Regulating the financial industry is the same idea, make sure companies have enough assets to pay off their obligations, for example.




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