> Say you have a 300k USD car. Say that a crash will cost you the full cost. You expect one crash in five years. You then have a yearly expected cost of 60k. If you get an insurance that pays for it all, for 10k USD a year, your ROSI is 500% which sounds like this insurance product is great for you.

But in the real world those numbers are backwards - otherwise insurance companies would go bankrupt! Your insurance for that will cost, like, 70k/year, your ROSI will be 80%, and you'll still buy the insurance, and you'll be right to do so.

Sorry, I don't follow then. Of course insurance companies will try to make a profit. The core of the method can be used to compare insurances and technically anything above zero is a good investment. I will reply no further here.

Of course it was an oversimplified example. All I wanted to show that ROSI can make a compelling argument for buying insurance. Now you're arguing that insurance is too cheap.

> All I wanted to show that ROSI can make a compelling argument for buying insurance.

But it can't! In the real world, insurance will always be a bad idea in expected value terms (unless being sold by an insurance company with bad pricing that's about to go bankrupt). Your model doesn't work and the only way you can pretend it works is by making up unrealistic fake numbers.

That's like saying that you can make profit off credit card debt if rates are negative. It's not a real-world case and nobody is going to offer that, it's not an analysis of any insurance that actually happens.