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Small-Scale Question Sunday for December 8, 2024

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

Culture war topics are accepted, and proposals for a better intro post are appreciated.

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makes a claim there's an algorithm to decide whether it's legitimate

That's how somebody breaks in and drains the system. They figure how to produce plausible claims and clean you out.

The goal would be to remove the profit motive from insurance companies

So, you create the system where nobody (human) has an incentive to keep it running well (even if you're a subscriber, if the system collapses you could just move your monthly premium payment to another system, so your loss is microscopic) but a lot of humans have a big incentive to break it. How long do you think such system will stand?

This whole "profit motive is bad" thing is stupid. Profit motive is the only thing that makes people design resilient systems. Well, maybe some people have huge egos and want to design systems just to stroke it and become even more narcissistic. But there's not a lot of people which are both this way and actually smart, and most of them will run out of steam eventually. Usually it's some kind of material motive involved. It doesn't have to be cash - could be other benefits, such as fame, power, recognition, etc. But money has been invented for a reason - it's the easiest way to incentivize people. If you start with excluding it, you probably will lose to people who do not.

have some potential for corruption, and I'm wondering if a transparent and user-run blockchain thing would clear that.

What kind of corruption are you fighting? Failing to pay out valid claims? But somebody would have to code which claims are valid, how would you ensure that person (or sets of persons) are not playing the system? Syphoning funds out of insurance pool into different investments and losing it? IIRC this is already pretty illegal for an insurance business, and usually not the first worry if you're dealing with a respectable provider. Obstructing your claims with bad service and arcane rules? Not sure how making it automatic would make it easier - AI chat bot can give you a run-around no less than a human can. Misleading people about what the rules are coming it, and then it's too late to complain when they already paid? Blockchain is an ideal vehicle for this kind of fraud, see a myriad of rugpull schemes around, with new ones born (and die) every day.