But it's sold to payers of premiums as protection against outliers. And if it's sold as such, but isn't really, then it's fraud. Let a hundred lawsuits bloom.
That's all true, but even gigantic insurance companies are sometimes overwhelmed by a surge in claims. Is that fraud too?
People need to understand that insurance is a kind of gambling -- a bet that claims won't wipe out the fund pool, that a random act of nature won't undermine the actuarial assumptions on which the pool is designed.
