Unfortunately the economics of insurance & low settlement demands from patent trolls would simply come into sync at some point.
This is because patent trolling is a low effort attack, while fighting them is a high effort activity. With an insurance company it would be no different: The pool of money from premiums still wouldn't be enough to fight all of the trolls because they would also all be pooled.
It's cheaper to just collect premiums, payout claims as little as possible, and if claims get too high you re-assess your actuarial tables and raise premiums where appropriate.
Insurance companies simply aren't in the business of solving the root-cause of any given problem. They're in the business of risk analysis & pooled risk & selling financial risk mitigation on that basis.
> Insurance companies simply aren't in the business of solving the root-cause of any given problem.
There is precedent for insurance underwriters to attempt to modify/reduce the risks of their underwriting.
Aviation insurance often comes with training or other restrictions more severe than what the FAA requires. “Coverage shall not be in effect until pilot completes FlightSafety initial. Coverage will then be only for supervised operations by a pilot meeting the open pilot requirements listed in ___ until a further 25 hours of supervised operating experience is completed.” or similar.
UL (Underwriters’ Laboratories) origin story is from building insurance underwriters seeking to understand their risk.
This surely is true for things where insurance company behavior doesn't increase risk. But here the incentives are different because every dollar they pay out to a patent troll is a dollar that can be used against them.
I could believe that they wouldn't be "scorched earth" about it. But I could see them being incredibly difficult to get a dime out of. Insurance companies tend to be like that normally, but here the incentives are even stronger.
> Insurance companies simply aren't in the business of solving the root-cause of any given problem. They're in the business of risk analysis & pooled risk & selling financial risk mitigation on that basis.
Insurance companies generally hold vast amounts of assets - and some already shift their investment strategy based on policy, e.g. climate change and other sustainability goals (see https://www.mckinsey.com/industries/financial-services/our-i...), work with large customers to reduce their risk exposure or indirectly go after the root causes, e.g. by exiting risk-prone markets (basically, no insurance any more for flood or fire prone areas).
Risk reduction is a little different than attempting to solve the root cause. It's also notable that risk reduction generally doesn't include launching massive litigation initiatives. An important distinction is that insurance companies try to reduce risk so that they reduce claims, not solve the root problem. In fact solving the problem could put them out of business. Any effort towards risk reduction is to maximize profit, not solve the problem.
I also don't see any market that insurance companies could exit to reduced patent trolling.
This is because patent trolling is a low effort attack, while fighting them is a high effort activity. With an insurance company it would be no different: The pool of money from premiums still wouldn't be enough to fight all of the trolls because they would also all be pooled.
It's cheaper to just collect premiums, payout claims as little as possible, and if claims get too high you re-assess your actuarial tables and raise premiums where appropriate.
Insurance companies simply aren't in the business of solving the root-cause of any given problem. They're in the business of risk analysis & pooled risk & selling financial risk mitigation on that basis.