Another way to look at it is that better ability to predict risks allows us to avoid many of them. If insurers can tell which houses in an earthquake zone will fall, they can raise the price on insuring that house. This produces a more efficient market outcome that seems to be independantly desireable: fewer people will build houses that are likely to be crushed by earthquakes. Even genetic risks have controllable environmental factors; those at risk for heart disease can adopt low-fat diets, excercise, and take statins; those likely to develop diabetes can go easy on dessert. Even carriers of the infamous BRCA genes generally opt to reduce their risk, through the drastic step of removing their breasts, and often their ovaries. They do this, not to avoid high insurance costs, but to extend their lives. But what about the poor? It is hard to see any reason why insurance companies should subsidize them. If society thinks that poor families should have insurance, then society should pay for it through the tax code, not slap regulations on insurance companies to keep information from reaching the market.

the good and bad of increased actuarial fidelity

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