China insurance markets in everything

Medical insurance often becomes invalid if the customer is drunk. But during the football World Cup in 2014, Shanghai-based Zhongan Insurance turned that rule upside down by offering Chinese football fans a policy specifically for self-inflicted liver damage.

It cost less than $1 and covered sports enthusiasts against alcohol poisoning for 30 days — paying out up to Rmb2,000 ($290) for hospital fees. It soon came to be known as “watching-football-drinking-too-much” insurance.

This has not been Zhongan’s only foray into more specialist areas of China’s insurancemarket. Another of its policies, called “high heat”, reimburses customers when the temperature hits 37°C. Another insures against flight delays — and, in many cases, pays out while the customer is still waiting in the departure lounge.

But while such products might seem niche, the company behind them is anything but. From a standing start three years ago, it has sold 5.8bn policies to 460m customers. This has quickly translated into profit. Zhongan went from making a loss in 2013 to posting Rmb168m in net profit two years later. Total assets jumped more than 500 per cent between 2014 and 2015, to Rmb8bn.

That is from Don Weinland at the FT.  And this:

Zhongan is finding it has competition in the market for offbeat insurance policies. TongJuBao already sells specialist policies to cover for the cost of divorce lawyers and for search teams to look for missing children. It also sells insurance that offers income protection for people who leave their jobs to move to a different city.

Shades of Robert Shiller…


Dehydration from crying too much insurance for European politicians? Not a good venture, too much likelihood of claims.

Is Italy going to vote leave?

Presumably this is just a cheap form of advertising. They offer a ludicrous insurance policy and it gets them international news coverage. Then they make a living selling more conventional products.

Even assuming that these contracts could be enforced, they are loss leaders.

They have a US subsidiary that sells cancer insurance with a pre existing condition exclusion, and a plan that kicked in with a $1 million deductible.

Both available for purchase in your HSA.

Is the allusion to Shiller because of Phishing for Phools or is it because of Shiller's broad view of risk sharing (in a perfect world all risks would be shared, the per capita cost would be nominal, and global output would be maximized). As to the former, selling life insurance to Phools is the worst. How so? Starting a new life insurance company is the path to riches for every ambitious huckster: insure a thousand lives, ten thousand lives, one hundred thousand lives, and the probability of many dying is extremely low during the first few years, increasing as the years go by, so the huckster collects all those premiums in the early years, pays out very little in benefits, and pays out enormous "profits" (in the form of compensation) to the huckster. The irony is that such hucksters are always getting awards for being such great Americans. While the probability of death among a given population has a normal distribution, the probability of default on bonds issued to finance housing can have fat tails as AIG discovered. Ironically (?), Maurice Greenberg spoke to Shiller's finance class during the onset of the financial crisis. As for probability and the irrational mind, Michael Lewis has written another great book, this one on the technical reasons why the mind tricks people into making irrational decisions.

Speaking of probability, doesn't Trump's behavior suggest a high probability of him doing something stupid that triggers a selloff in the market? Are investors irrationally ignoring what's in front of their noses? Or (as I've speculated before) are sophisticated investors slowly selling assets (or taking steps to offset the risk) in anticipation of a selloff without triggering one themselves while they own them (or before taking steps to offset the risk)?

Re probability of Trump causing market decline: Yup

In fact, I plan to short sell any day Trump calls a press conference.

Now that I told you my secret the market will correct for that.


So, going with the Paul Krugman strategy.

"If the question is when markets will recover, a first-pass answer is never." Paul Krugman

>In fact, I plan to short sell any day Trump calls a press conference.

Ignore him, JW. This is just the December version of "In fact, I plan to move to Canada if Trump wins the election."

Only even lamer. (If that's possible.)

I suppose the market corrected for fat tails in 2008, but only after the fact. Everybody's a genius (even markets) after the fact. As for Trump risk, I understand why markets responded to the likelihood of higher deficits and government spending (i.e., positively), but how does the market know how to anticipate an ignoramus saying and doing stupid things. The irony: Cowen has written (is writing) a book about complacency and the need for disruption, and he's got his wish. God help us.

Alcohol poisoning is not liver damage. It is the suppression of nerves that control involuntary actions such as the gag reflex and breathing, which stems from a high concentration of alcohol in the blood.

Alcohol consumption over longer periods of time can lead to liver problems, fatty liver and ultimately cirrhosis, but this insurance does not seem to cover that.

A fellow I know has a Volkswagen diesel that's subject to the repurchase agreement. The company is supposed to be giving him something like $10,500 for the car if he turns it in before 2018. It has to be driven into a dealership. Its actual cash value is $3500. It's insured but he's afraid to drive it because if it gets hit and declared a total loss he'll lose $7000. He says he hasn't been able to get insurance to cover the difference. I say he's not looking hard enough.

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