RE: state vs. insurers (was: Libertarian theory breaking down)

From: Emlyn O'regan (oregan.emlyn@healthsolve.com.au)
Date: Mon Mar 24 2003 - 19:40:04 MST

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    > On Mon, Mar 24, 2003 at 05:38:30PM -0600, Lee Daniel Crocker wrote:
    > > That doesn't make sense to me at all--that would be an incredibly
    > > stupid thing for insurance companies to do. If the agressive state
    > > announced its intent, then /demand/ for insurance would go up and
    > > people would be willing to pay more, and insurance companies would
    > > be stupid not to take the business.
    >
    > The insurers would be stupid to not take the business only if
    > the premiums
    > are high enough to cover both their expected military costs and the
    > indemnities they'll have to pay off if any insured properties
    > are damaged.
    > If the targeted area is small enough, the people in it simply
    > won't have
    > enough money to pay for the expected costs and damages, even
    > if they give
    > all of their incomes to the insurance companies.

    For this to occur, the force being used to attack a threatened area must be
    far larger than that area could reasonably support (and thus defend against,
    or afford to defend against).

    An insurance/defense company that covered a large area would be wise to
    guarantee the safety of all residents of the area, and to have cooperation
    agreements with other large companies, such that their forces are combined
    to protect any threatened area. Thus the cost spreads over the entirety of
    the insured, and the tactic of threatening only very small areas wont work.
    The insured, for their part, get unconditional blanket protection in their
    agreement, in return for accepting that all other customers do too. Insurers
    would really have to make guarantees such as these, in order to retain the
    confidence of their customers.

    I still don't understand how all the smaller insurers wouldn't get gobbled
    up into a big monopoly, which then has a monopoly on violence and can decide
    to become a defacto government. How do you protect against this?

    Emlyn

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