Consider a fire insurance company.  It sells you some fire insurance.  A bit later you get a letter.  They offers to drop by the house and do a free consultation on how you might lower the risk of fire in you house.  This seems clever and wise on the part of the insurance company.

This is why the insurance industry is very active in setting safety standards across most industries.  A lot of social benefit arises from the pooling of risk, and this kind of standard setting is an example of that.  Agency is not always bad, eh?

But does it ever go the other way?  Can we find perverted situations where the insurance company wants more claims?  Were the loss prevention department becomes the loss assurance department?  Yes we can.

In this story we see the phone companies have intentionally avoided taking steps that would reduce loses that they sell insurance against, i.e. stolen phones.  They intentionally engineer things so there is a vibrant market for stolen phones.  That assures more phones are stolen. That increases demand for insurance.   Insurance policies is very profitable.  It’s good! for the phone company that least.

“Nice phone you got there, would be a real shame if something bad happened to it.”

I’ve written before about scenarios where the problem solver becomes the problem’s advocate.