Active Insurance

I've been thinking about a potential business idea for seasteads (although it would work elsewhere as well) which my friend Daniel called "Active Insurance". It came out of daydreaming about what I'd want to do with lots of money if I made it.

One answer is "buy healthcare which gives me a long and happy life", which made me wonder how someone with lots of money would turn money into health. If you have enough money, just buying healthcare won't soak up enough. What I would really want to do is to sponsor medical research into the things which were going to kill me.

So imagine an organization you could join, and give whatever amount of money you want to devote to your health problems. The organization starts out with a full risk assessment to figure out what causes are most likely to kill you. The organization then allocates your money to its research funds in proportion to their risk. So each medical problem is funded in proportion to the sum of risk it contributes to the membership pool weighted by the contributions of the at-risk members. (Even better would be to add an estimate of the difficulty of addressing a given problem, and thus the benefit of marginal dollars).

The larger a fund and the more obscure the health problem, the more likely the organization would start an in-house effort. For smaller funds and more common problems, it would instead give research grants, donations, and venture capital to other organizations. Any breakthroughs or products would be first available to members, then either sold to other medical companies (to increase funds available for solving more problems) or given away, depending on the cost structure, demand structure, and goals of the membership.

I suppose that a truly efficient regular insurer would render such a system less useful. The insurer would have incentive to research medical breakthroughs that would reduce their costs by more than the cost of the research. But they don't have the sliding cost structure, where people are willing to pay more because they know the money is going directly towards figuring out how to extend their life, solve their problems. And in practice, while they fund some such research, they don't fund much.

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let the free market do the work

Instead of assessing risks and trying to plan everything you could use the following approach. Sell lifetime fixed income bonds, contracts whereby you guarantee that you will pay a fixed amount of money every year, as long as you are alive (or some other criterion such as, able to hold a rational conversation).
First of all if will provide you with an accurate account of your current life expectancy (which may be a bit scary after all), some investors will try to speculate on this to make money. Some investors may be more active and try to build business around these bonds by buying them cheap and offering you health services... they may convince you to use some medicine... other investors may want to test those medicine first etc. Ultimately the funding comes from your selling of bonds, the more bonds you sell the more investors.
Things could get ugly if people start shorting bonds, they gain a huge incentive to kill you. There are a few ways around this. You can try to forbid short selling, the good way to enforce it is to make any lending of these bonds null, therefore the lender could at anytime claim the short seller's profits thereby cutting the incentive to try and short sell. No bond holder wants to see you dead, therefore no one would wish to lend its bonds. Finally, the best solution may be to sell non transferable bond it is less dynamic but much more secure. Each bond holder would be known and a bond holder meeting would be held in order to make a regular check up.

Interesting idea. But note

Interesting idea. But note that someone still has to assess risks, allocate funds, and plan research - in my scheme it is one company, in yours it is individual investors and speculators. It still needs to get done - using the market does not change that.


It definitely needs to get done, but one thing I like about Arthur's proposal is the interesting way he tackles the thorny question of incentives that help to motivate people to get it done. And also, maybe, to get things done that wouldn't occur to you or me or Arthur planning a company.


This idea really just sounds like getting people to fund research and in return providing them with healthcare and the promise of using their money to find cures...Why not instead, just invest your money directly into the companies that do the research instead of going through a third party?

I want an expert middleman

I want an expert middleman to figure out:

a) What is going to kill me
b) What the most effective ways are to spend money to ameliorate threats found in (a).
c) How best to combine (a) and (b) to improve my health.
d) How to start a company to work on (c) if ones don't currently exist.

I am under the impression

I am under the impression that in most cases, the answer to (a) would be very boring. Unless you have a history of some sort with a given disease, it's probably going to be a cancer or a heart attack and there are already plenty of companies working on that.

If I had piles of cash, I would set up a bounty price for cryonics. Freeze a chimp for a week and unfreeze it back to life: get X M$