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RobinHanson's avatar

I agree there is still the matter of the maximum liability amount that insurance must cover.

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MattyD's avatar

I think this is an improvement, but not sure it solves the problem. The question first becomes the limit of insurance rather than size of the investment (purchased by the investor or the firm?). If you want to make the insurance statutorily unlimited, it shifts the question to the capital of the insurance company (and now insurers will be more similar to equity investors). In both of these, we're moving in the right direction, but these limits can become relevant for the types of liability events that are existential issues for large publicly traded companies (e.g., mortgage lender / financial institution liability for the financial crisis, nuclear cleanup).

Nevertheless, insurance would be an improvement since the liability still exists whether it's the investor, firm, or society taking the risk.

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