Nature's Casino: Catastrophe Insurance and Heavy Tails

Courtesy David Richard, here is an interesting (but very long!) article on catastrophe insurance.

The part that was most interesting to me was the discussion of heavy-tailed phenomena like catastrophes and how one prices insurance for them as a result of that. (The mathematical problem is that the events are so rare that one does not have a large amount of data to get good results by itself. One of the things around this at which the article hints briefly is to use physical models to generate tons of data and then use that to help with the predictions, though that was tangential to the article's crux.)

Also, while the article is interesting, I do find it a bit creepy that there are basically gamblers betting on future Katrinas and that that has become an enormous business since that disaster struck. (The cynic in me isn't surprised, but I do feel somehow disappointed.)

Finally, the author of the article, Michael Lewis, also wrote Moneyball (which has a more baseball-oriented theme).

Adventures in Moving Insurance

I just spent an hour and a half futile hours trying to fill out several pages of insurance forms pertaining to my upcoming move to Oxford.

As stated explicitly in the insurance forms, spontaneous combustion is not covered by this insurance. It was listed among several things known collectively as "inherent vices", which means "the inherent nature of the goods to become easily destroyed". (What they're really getting at here is death by natural causes --- such as battery decay in old iPods, rust, and so on --- as opposed to their breaking something, but I find their phrasing to be pretty curious, and I find the explicit statement about spontaneous combustion to be particularly odd.) My goods must repent their sins! Now, damnit! No more spontaneous combustion! I won't stand for it!

Another weird thing is that cordless phones are apparently considered restricted/prohibited goods in the UK. I'm going to have to ask (Mike)^2 about that one. I was hoping to continue using one, because I really like those. Maybe they can only be in certain frequency ranges?

Anyway, I want to insure my stuff by filling out this shit. (OK, that joke didn't work, but there really has to be a way to properly allude to George Carlin's "A Place for my Stuff" with this shit.) I filled this out to the best of my ability (which isn't actually saying much), but when it asks for the quantity of various shit, my case of OCD is no even close to extreme enough to count my books one by one. That's just way too much of a pain in the ass. (I basically did separate estimates for textbooks and other books.) Moreover, prices for a lot of this stuff is different in the UK, and I am not going to spend tons of hours investigating the precise differences. Doing my best to approximate things makes the most sense to me.

The customs part of the form wants you to write down everything bought in the 6 months prior to the move. For me, this would include a bunch of books, and I can't even nail down the precise number of them I'm taking with me that I've purchased in this time frame.

Well, I'll fax this to the people at the UK insurance company and we'll see if I need to be more specific about anything.