When I saw this headline:
Australians refused insurance because of poor genes
And this headline (ht Marginal Revolution):
Australians denied insurance for genetic reasons
I immediately thought that they were talking about all of Australia. Then I read the article and realised how ridiculous this thought was 🙂
Supposedly some insurers are not allowing insurance because of newly testable genetic risk. Now how do you guys view this, I see two ways:
- It is good. It gets rid of the asymmetric information problem to some degree, so that we can have the “optimal” level of insurance. People that are low risk will now be able to insure themselves more cheaply afterall.
- It is bad. There is an endowment issue – some people are endowed with bad genes, and we want to redistribute to these people to make up for it.
Personally, I think even if we believe the second issue it would be better to have an efficient insurance industry and then redistribute ex-post …