Yeah. You aren't allowed to set up a life insurance policy on someone else's life, or a fire insurance policy on someone else's home. For obvious reasons. But buying an event contract that pays if someone dies or someone's house burns down is fine?

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chollida1 2 hours ago | parent | next [-]

being pedantic here but

> You aren't allowed to set up a life insurance policy on someone else's life, or a fire insurance policy on someone else's home

This isn't really true. Lots of people take out life insurance on others as a hedge for many reasons, small business partner is one. Same fire insurance, we had a case where someone pledged a building as collateral and we took out separate fire insurance on the building so we'd get paid out immediately.

I'm not sure where this false premise started but alot of people believe it.

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compiler-guy 2 hours ago | parent | next [-]

The technical term is that you must have an “insurable interest” in what you insure. Both of your examples are people protecting their insurable interest. Ownership is the most common insurable interest, but there are many other ways to have one.

This is done because the insurance company wants you to prefer that the covered event doesn’t happen, which avoids some conflicts of interest.

These prediction market events don’t have the usual insurance interests involved.

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chollida1 2 hours ago | parent | next [-]

> The technical term is that you must have an “insurable interest” in what you insure.

Yep, we're in full agreement here

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sandworm101 an hour ago | parent | prev [-]

Unless you short the property. Essentially, sell it now on the bet that it will drop in value later. Then it burns down and you repurchase the vacant lot and return the property to the original owner.

Evil, but most everything in real estate is evil.

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emsign 32 minutes ago | parent [-]

And that's exactly the problem with Polymarket and such, it gives an incentive to be destructive because that's easy. Entropy is easy.

With an insurance this trick won't work, because the insurance company will notice what you are doing. Polymarket doesn't care.

	▲	WinstonSmith84 4 minutes ago \| parent [-]
		> With an insurance this trick won't work, because the insurance company will notice what you are doing This has worked well millions of times (and occasionally failed too with people ending in prison or with huge fines). Where I can agree however is that Polymarket makes that much easier.

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mschild 2 hours ago | parent | prev | next [-]

To perhaps be a bit more pendantic.

You're not allowed to take out life insurance on someone you don't know or have a relationship (business or otherwise) with.

Life insurance on a business partner works. Life insurance on your spouse as well.

Life insurance on the leader of a random country? Unlikely

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PyWoody 2 hours ago | parent | prev | next [-]

> I'm not sure where this false premise started but alot of people believe it.

It being the driving plot behind Double Indemnity probably started it. I always thought it was true until your comment, too.

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hmry 2 hours ago | parent | prev [-]

No no I appreciate the pedantry, thank you for the correction

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criddell 9 minutes ago | parent | prev | next [-]

> But buying an event contract that pays if someone dies or someone's house burns down is fine?

You can sell your life insurance policy to somebody else. It's a way of getting money to sick people to use while thy are still alive.

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philipallstar 2 hours ago | parent | prev [-]

Well, you are privately allowed to bet on whatever you like with another individual. That is indeed legally fine, though potentially distasteful.

Polymarket is facilitating bets between people, not bets with the house. Gambling and insurance are both bets with the house.

	▲	kube-system 2 hours ago \| parent \| next [-]
		> Well, you are privately allowed to bet on whatever you like with another individual. What jurisdiction are we painting with that broad brush? This is far from universally true, even in the US.
	▲	jubilanti 2 hours ago \| parent \| prev \| next [-]
		Nope. "We're just an intermediary between people" is a 100+ year old yarn that casinos and bookies have been trying to spin. If you're presenting a point of entry to a betting line and taking a cut, congrats, you're the house. Doesn't matter if you adjust the betting line manually based on intuition or algorithmically based on betting volume. Sometimes it doesn't get enforced because of corruption, but if this was the case, then why aren't there tons of independent unregulated poker casinos where players just play against each other? If you facilitate and take a cut, you're the house.
	▲	josefritzishere 2 hours ago \| parent \| prev \| next [-]
		That "facilitating" argument didn't work out for Silk Road.
	▲	CPLX 2 hours ago \| parent \| prev [-]
		What the hell are you talking about? You are absolutely not allowed to bet on whatever you'd like with another individual. Depending on what you're betting on (for example, the price of a stock or the throw of a card), it falls under varying different regimes. This is highly regulated and has been for most of the whole of human history. Yes, there are de minimis exceptions. Your office NCAA pool, for example, is often legal, but it has nothing to do with what we're talking about and is also irrelevant to a business facilitating it via 18 U.S.C. § 1955.