The heart of insurance – what enables insurance to function – is risk aversion. It follows from the fact that potential policyholders are risk averse that sometimes they are also averse to the risk that insurance covering a loss will not be available or will not be reliable. In this Article...

Insurance is an enormously powerful and beneficial method of spreading risk and compensating for loss. But even insurance has its limits. A new and misleading aspiration for insurance – that it also can and often does substitute for or significantly complement health and safety regulation –...