If you already know that an adverse event is highly likely for your specific circumstances, then it is likely that the insurer will refuse to pay out for not disclosing "material information" - a breach of contract.
Loss leaders are common, but rely on a reasonably accurate prediction of what that loss will be. and simple errors are of course common.
I think "nobody knows what they're doing" is an overstatement. Insurance companies make significant profit, and very rarely fail. The usual complaint I see from investors is that some years an insurer has made less profit than others - which is exactly what one should expect, so clearly these investors don't understand what they've invested in.
Your bike example sounds like bad luck. An event with a probability of 1% per year can still happen three years running.
It would be interesting to consider the inverse Kelly - given an insurance premium X, what are the reasonable bounds of assumed probability of an adverse event costing Y?
I'm not sure how the wealth of the underwriter could be estimated though.
In the majority of cases the insurer has more knowledge, as they can afford the time to do the research.
This is of course why any insurance market must have a great many suppliers. If there are only one or two insurers, they can easily set the premiums to make supernormal profits because they are 'competing' against consumers with very little knowledge, instead of other insurers who have similar knowledge levels.
Indeed. In reality, the vast majority of people do not have sufficient information to make reasonable estimates of the probability of loss - and in many cases, even the size of the loss.
Eg a landlord is required to rebuild the place and temporarily rehome the tenants while that's being done in the event of the house being destroyed by fire or flood. They're also liable for compensation and healthcare of affected third parties - and legal cost of determining those figures.
They can probably calculate the rebuilding cost and a reasonable upper bound on temporary housing. But third party liability?
So, it still comes back to vibes.
A refused claim is (legally) an event that was never covered by the insurance, and is therefore irrelevant if the question is "take policy A or not at all".
After all, if that event occurred without insurance, it is still not covered.
However, this is important to consider when comparing different policies with different amounts of coverage. Eg "comprehensive" car insurance compared with "third party, fire, and theft".
"Rates" of unpaid claims only make sense in a situation where the law allows the insurer to breach their contracts. In that situation, the value of insurance plummets, and possibly reaches zero.
For those who would like a hint.
In English, "And" generally indicates addition, "Per" division.
Now consider which of the following makes sense:
Ferrets and seconds
Ferrets per second
1The issue there is that "best X" varies wildly depending on purpose, budget and usage.
Take a pen: For me, I mostly keep pens in my bag to make quick notes and lend out. The overriding concern is that the pens are very cheap, can be visually checked whether full or empty, and never leak, because they will spend a lot of time bouncing around in my bag, and I am unlikely to get them back when loaned.
A calligrapher has very different requirements.
1The really short answer:
No. The lab would not shut down. It would probably not even notify anyone outside the company of the alignment problem or the escape attempts.
The evidence would be buried, and is unlikely to come to the attention of anyone outside the lab until after a devastating incident.
For real-world examples, look to other industries.
Perhaps the two clearest examples are:
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The UK Post Office "Horizon" computer system. This was known to be making egregious errors, yet postmasters were prosecuted and imprisoned on the known-faulty say-so of the Horizon system.
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Grenfell Tower Fire. The public enquiry has found multiple cases where the evidence that the cladding was highly flammable and unsuited for use on tall buildings was deliberately hidden from the authorities, and even when the authorities knew (or should have known), the evidence was ignored.
Similar cases can be found throughout the EEA, US and Canada.
The advice we were given was "Fed is best".
However, we also very much wanted to breastfeed, primarily due to convenience and cost.
Getting started was very difficult. We used a small number of premixed formula bottles, two of which were "free samples". We almost gave up.
A lactation consultant helped us find a comfortable position, and eventually ended up with the "rugby hold", which makes no intuitive sense whatsoever - the infant is held under the arm, legs almost behind the mother.
Once started, breastfeeding turned out to have several clear advantages, some of which were very surprising to us:
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Low poo volume. Breastfed babies produce very little poo early on, as almost everything is absorbed. Formula produces a lot more poo. (This is apparently well-known among midwifes & health visitors, but not mentioned until we actively asked)
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Low to no poo stink compared to formula. (Anecdotal) In discussion with other parents we found that the formula fed infants poo smelled a lot worse, even accounting for volume and parental preference (your own child's poo stinks less than that of all other children)
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Reduced rate of constipation. Formula fed infants are at a much higher risk of constipation, as a side effect of the above.
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Reduced posseting. Bottle fed infants swallow a lot more air due to the mechanics involved, which makes them need more burping and bring up more milk when they do. Obviously this is due to the bottle itself rather than what's in it, but formula fed is 100% bottle while breastfed is some lower percentage.
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Night feeds didn't require full waking. The mother can do it half asleep and the infant is fed almost instantly, as mentioned elsewhere. However, this can only be done by the breastfeeding mother. The partner cannot assist.
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(Anecdotal) Flying was easy. When disturbed, simply insert nipple and infant is immediately calmed. However it is possible a pacifier would work similarly well for a bottle fed infant.
Indeed. The incentives to put new ones on the market are very limited, due to legalities and economics.
A corporation has a limited window of patent monopoly, so a fairly short time period to recoup their investment to develop, licence and build out manufacturing capacity - thus need to sell it for a high price or sell high volumes.
It is a long and expensive process to get a new compound approved for use as a food additive, and it needs to be done separately in each major jurisdiction - at least China, USA and EU.
A new sweetener is directly competing against all the other ones that are already on the market - merely 'being much sweeter' isn't enough.
It has to be significiantly better in some other way, if only because it will be considerably more expensive at first.
"Corporate leaders might be greedy, hubristic, and/or reckless"
They are or will be, with a probability greater than 99%. These characteristics are generally rewarded in the upper levels of the corporate world - even a reckless bad bet is rarely career-ending above a certain level of personal wealth.
The minimum buy-in cost to create have a reasonable chance of creating some form of AGI is at least $10-100 billion dollars in today's money. This is a pretty stupendous amount of money, only someone who is exceedingly greedy, hubristic and/or reckless is likely to amass control of such a large amount of resources and be able to direct it towards any particular goal.
If you look at the world today, there are perhaps 200 people with control over that much resource, and only perhaps only ten for whom doing so would not be somewhat reckless. You can no doubt name them, and their greed and/or hubristic nature is well publicised.
This is not the actual research team of course, but it is the environment in which they are working.