"Attorney general seeks death penalty for Luigi Mangione."
(media.scored.co)
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No, the ideal insurance is one that pays out legitimate claims when the customers need it and at a premium that is justified by the risk variance. Customer doesn't give a shit about anything else.
In fact, people will pass over insurance that's too low.
If people believe the value of the insurance is 20% over amortized payout because of high risk variance they'll not buy insurance at 2% over because they'll suspect something is wrong; if people are willing to pay 20% extra to not roll the dice and you're only charging 2% then they'll expect the company to not pay them when they need it (and they'd be right).
Everybody in the US that has private insurance believes it's a better deal to have it instead of rolling the dice. There's no individual mandate. If it's not worth it for you, roll the dice - or get catastrophic insurance that pays for your casket.
This has nothing to do with the ideal insurance company. You completely (and everyone else) missed the point.
I'll spell it out in a simple example for you.
There are 7000 customers who want insurance on their next 1d20 roll. They want a payout of 3000 dollars for a nat 1. Thus the expected payout for the insurance company is 0.05 * 3000 = 150 dollars per person. The ideal insurance company has to charge 150 dollars per person. Some of the people won't "win" the insurance, some will, but the law of large numbers says the insurance company won't lose or gain money. A non idealized but ethical insurance company will have to charge a small additional amount to their customers to cover their overhead: salaries, rent, fees, and reinsurance. The more they increase their overhead, or their profits, the further they are from ideal.
The problem comes in when you get Board members, CEOs, and stock holders involved. They want to maximize their profits so they charge 1500 dollars per person. They lie to everyone about the odds saying the odds of rolling a 1 on 1d20 is 50%, so instead of taking in and paying out 1.05 million dollars, they take in 10.5 million dollars and still only pay out 1.05 million dollars, getting 9.45 million dollars profit. Or they just increase the overhead via increasing salaries and claim no profits because it is all going to buy their next yacht and summer home. That lets them screw both the customers and stockholders.
Why would you buy insurance for a $3000 max payout? Just put the money in an investment account and even if you get unlucky several times you can weather it. This is a strawman example.
A real example is more like a 100-sided die you roll once a year and if you get 1 then you're completely wiped out. Financially ruined and have to live under a bridge. This is what real insurance is for, unpredictable events that will seriously impact your life that you can't just save for.
Mathematically you could say that insurance should be 1% of your wealth, but that's the cost to insure not the value to the insured. If your choice is either have a 1% risk of catastrophic loss or 2% for the insurance what would you actually do? You'd pay the 2%. Ask yourselves honestly how much you would pay to avoid a 1% risk of total loss of everything you have. That difference is the value you place on the service of eliminating the risk.
If you think the insurance should be priced at the cost to insure rather than the value to the insured then you must consider eliminating risk to be of zero value. If that truly has no value to you then you wouldn't ever buy any insurance even at cost to insure. I doubt you'll go through your whole life and never buy insurance for anything, so clearly you don't actually believe the ideas you espouse.
You don't understand math at all do you?
The expectation value of an event is the probability of that event times the signed reward of that event. V = P*R
The insurance company knows the real probabilities of events because they have the empirical data. The will not price the insurance at a level below the expected payout for any given event. The 2% you keep mentioning is therefore just as catastrophic to you as the event itself. If you cannot pay for something happening one time, then you cannot pay for the equivalent happening twice.
The only time insurance makes sense is when you rig the game against the insurance company by hiding information from them.
So you think losing 2% of your wealth per year is the same catastrophe as losing all of it maybe once in your lifetime? You should just admit you're wrong rather than this bizarre display.
I gave your some credit as maybe an idealistic youth, but this is just retarded.