Play · risk pooling
The Risk Pool
Updated 2026-10-28 · Concept: a small certain cost instead of a large uncertain one
Insurance is a room full of households paying a known amount so that the few who draw the loss do not pay it alone. This is that room, with the arithmetic showing. The chance and the size of the loss are yours to set: real perils differ, and this is the mechanism, not a premium quote and not a claim about how often houses burn.
Predict first
100 households. A 2% chance each of a $20,000 loss this year. Before any insurer adds a margin, what is a fair premium for one household?
Pick an estimate, or skip to your own numbers.
Fair premium is chance times loss. The load is what a real insurer adds for expenses and profit; 25% is a round starting point, not a market average. Expected claims can be a fraction of a household: that is the average, which is what a pool prices, not a promise that exactly two houses will burn. A loss everyone will eventually have is a poor thing to insure: the premium climbs toward the loss itself, plus the load.
Give a portion to seven, and also to eight; for thou knowest not what evil shall be upon the earth.Ecclesiastes 11:2
KJV. A wisdom saying about spreading what you cannot predict, not a command to buy a policy. Readers take it as spreading ventures or spreading generosity; either way the reason the verse gives is the transferable idea: you do not know which portion will be the one that meets the trouble.