Had a debate recently with an insurance salesman.
I was complaining that
1) there was a disaster in NZ but it was not legitimate for them to raise my premiums because of an earthquake in christchurch because the risk of an earthquake in auckland hadn't changed (from close to 0%).
2) Reinsurers dont add much value, and that in theory some sort of state aparatus could get into that industry if anyone had the political will-power and that that would be a good thing because they seem to be making oligopoly profits (like monopoly profits) from a position of power (hence why they can charge me war risk premiums when i ship things from NZ to australia and earthquake surcharges in auckland).
against point 1 he argued that insurance is a charity of sorts and that an earthquake in christchurch is NZ's earthquake so it is in a sense our duty to donate via my insurance payments to subsidise them even if this places incentives in the wrong place (eg for people to build houses in places that are earthquake risks just as conversely their denying insurance to some people in these areas results in those people not being able to get insurance from anyone).
against point 2 he argued that the reinsurers had made a loss on september 11 and a few other events like the japan earthquake and were only just recouping that loss now, and that it was inevitable that they would do so (as opposed to just raising capital based on future risks?) and that their industry is a low profit industry and one that no state could get into without being downgraded significantly by credit rating agencies even if they only focused on those areas the reinsurers are using to recoup losses from other areas (eg war surcharges for australia / NZ).
hopefully I didnt misrepresent him... But I cant see it as defensible from either a socialist or a capitalist perspective..