I recently collected nearly £2500 from an insurance company because a policy had been mis-sold when I bought a house.<p>The policy was sold so the agent could get their commission. There was no credible justification for it. Worse, there was no record showing that I ever signed any paper authorising the charges.<p>When I talked to the investigation department, they said that off the record, between you and me, record keeping is incredibly poor, and my case was only unusual because I'd questioned the payments - and most people don't.<p>My partner is going through something similar, but the paper trail in her case is even more tenuous. The only justification on file for thousands of pounds in payments collected from the 90s onwards is a mortgage application she made a few years ago - and didn't even go ahead with.<p>This is on top of a national Payment Protection Insurance (PPI) scandal which forced insurance companies and banks to return billions of pounds.<p>Somehow this never seems to be labelled criminal fraud. It's always "Mistakes were made..." and no one is ever personally responsible.<p>So honestly, I'm finding it hard to be sympathetic to the poor exploited insurers in situations like this.
This kind of thing goes way back and used to be much easier.<p>Over-booking of flights used to be a huge problem back in the 90's and earlier. You'd get on the plane, someone would be in your seat already, and that's when you found out you didn't get to fly on that flight.<p>Airlines figured out this pissed people off and started counting tickets before letting people onto flights. If they had too many people waiting to board a flight, they would make an announcement and start offering free stuff to people willing to be bumped or take a later flight (this still happens in rare circumstances today but used to happen on most flights for a few years).<p>I remember listening to a gate agent threatening to call the cops on a college age guy who was picking up his third free ticket of the week for accepting being bumped off an Oakland to Las Vegas flight. He'd apparently figured out that that flight was always overbooked (which wouldn't have taken a rocket scientist given the high rate of overbooking at the time), and the only reason he got caught was the same agent kept getting assigned to work the counter for that flight often enough to remember his face.<p>Interestingly, I also flew on a nearly empty flight once during that era. The pilot came on the loud speakers and said "the next time you are wondering why flights are over booked, remember this flight - this plane was booked to 120% capacity (or some other number well over 100%) for this trip."
> The Paper later found out that many insurance companies have already fixed the loopholes that Li took advantage of to get rich.<p>> The ones they checked with now have a clause that says they will not be responsible for any payout should the insured, at the time of buying, already knows or reasonably deduces that the flight can be delayed anytime.<p>What kind of clause is that?
If the insurance companies were so consistently mis-pricing their contracts, instead of calling the police they should have hired this woman and used her expertise to design dynamic pricing algorithms.<p>The article says the insurance companies have now closed the loopholes she exploited. To me, she deserves every dollar she made for making the insurance market more efficient. I'm sure those errors would have cost these companies much more than $400k over the long run.
Ignoring the identity fraud and supposing the information obtained were public, this thread seems to have a lot of people who believe that applying information arbitrage to insurance is in and of itself inherently wrong, and that's not a stance I think I can agree with.<p>As a litmus test, when the roles are reversed and the insurance company overprices a policy we seem fine with that as a society because even though any individual can have a hugely disproportionate premium the company as a whole has bounded profits (both legally and due to competitive forces). We might even try to argue that an individual can't possibly know their own risk better than a team of actuaries and that they should accept that the premiums are actually correct.<p>If an insurance company is allowed to knowingly profit 2x, 3x, or more on an individual's premiums based on their best models, why is an individual disallowed from doing the same if only using public information?<p>If so, where do we draw the line? Is it at a break-even point? What if the insurance company were trying to target an individual for 15% profits; is that person allowed to engage in the contract if they think the company will only earn 3% on average since that would also demonstrate a model better than the company's?<p>I can definitely see arguments against an individual having any _causal_ effect on the policy (e.g., like burning down a house), but I'm struggling to see why this kind of information arbitrage is inherently wrong.
Well, insurance is just gambling with extra steps. Usually, you bet on something bad happening like your house getting burgled or your flight getting delayed, and the insurance company takes you up on that bet.<p>In a very abstract way there's not much difference between this and betting on sports.
Isn't this a legitimate trading strategy in financial circles<p>Contracts like credit default swaps pay out if some organisation fails to meet their (debt) obligations
I don't really understand how she made money. She apparently still bought tickets. If they weren't delayed she refunded the ticket early. But wouldn't otherwise the insurance payout just offset the price of the ticket? Or was there a premium on top of that?
FWIW - Flight delay insurance in China is sort of like buying a scratch-off lottery ticket. The terminal is dotted with little kiosks where you buy the insurance for 20-50 yuan and hope it pays a couple thousand yuan for a delay.<p><a href="https://blogs.wsj.com/chinarealtime/2014/09/25/flight-delayed-in-china-theres-insurance-for-that/" rel="nofollow">https://blogs.wsj.com/chinarealtime/2014/09/25/flight-delaye...</a>
> The ones they checked with now have a clause that says they will not be responsible for any payout should the insured, at the time of buying, already knows or reasonably deduces that the flight can be delayed anytime.<p>Wait how is that the solution at all? That seems like might be a lot worse for everyone involved, including innocent insurers. I would expect them to somehow reduce the payout to only the cost of the flights or similar, resulting on a net neutral for the insured.
Heh, I actually did a junior version of this, myself. I play Dance Dance Revolution (video game were you press the buttons with your feet), and buy foam pads to play with. Stores loved to sell you their extended warranty, which everyone tells you is a bad deal.<p>Well, I noticed that this particular brand/model (Red Octane 2.0 I think) failed pretty quickly[1]. So I always paid the $3, which entitled me to a quick, easily replacement (normally $50) when they inevitably broke down.<p>[1] Like after a few months -- not soon enough to be annoying, but sooner than they're supposed to last.
So the police arrested her. Why wouldn't the police seize insurance companies assets when flights were not delayed? They do exactly same with people, right?
The problem was her access to privileged information about the flights. And, misleading multiple identities. If she'd stuck to hedging and sold a service she probably would have IPO'd by now.<p>The arbitrage function remains useful.
> The Paper, citing Yangtse Evening Post, said she was able to receive relevant information beforehand that tells her if the flight was going to be delayed or cancelled.<p>Why does the title say she "predicted" they would get delayed?
Even though it didn't end up well for her, it's nice example of how non-technical person can "hack" the system. She definitely has hacker mindset.
> The ones they checked with now have a clause that says they will not be responsible for any payout should the insured, at the time of buying, already knows or reasonably deduces that the flight can be delayed anytime.<p>I think if burden is on insurer, then insurance can get away with any payout. They can always claim you knew weather is bad. So after all, insirance career is a big winner here.
that's not really that surprising, many travellers in Europe I know were buying lot of flights during pandemic knowing they will be cancelled and they will get bonus miles as compensation to accumulate them, you didn't even need insurance for that<p>I know plenty of people who made hudnreds of euros on these low cost flights, it's same people who are buying error fares<p>there is nothing fraudulent about it<p>you can do actually same thing with sending packages insured for much higher value than is content to destinations where you know they are very likely to be stolen/lost
Woman buys insurance to make money... and somehow she is arrested.<p>This reminds me of the other articles -- parents pay $500k to private university so their kids can be accepted... and then somehow they are arrested.<p>When articles write about people being arrest, do bother to document what is the violation.<p>Probably the best reading of "..." nowadays is "and making money is bad, so" or "and this made somebody higher-class than them sad, so".
too bad this article is so thin. i'd be interested to know how she made a dime. what insurance policies pays you back more than the cost of the travel arrangements themselves, which you are already out of pocket on?