Markets which only look like an infinite regress

The risk that a claim won’t
be paid–a potential downside that every buyer of insurance faces–was an
uninsured exposure until recently, according to the developers of a new
policy to provide coverage so that risk managers can contest such
rejections…

The
new coverage, available to businesses of all sizes, will pay up to
$250,000 in legal expenses associated with contesting the denial of an
insurance claim under a commercial policy.

Here is the economic rationale:      

Mr.
Surdyk said that during the course of his work with insureds, he found
that while many clients had legitimate disputes with their insurers,
the underlying claims being denied were small-dollar amounts relative
to the legal costs of coverage disputes.  “It wasn‘t
worth it for a client to hire us to file a lawsuit against an insurance
company over $50,000–and insurance companies know that,“ he said.

Here is the full story, and thanks to Travis for the pointer.