Skip to Content
1-16-2009 @ 10:06AM
This is a classic insurance scam. Collect premiums and pay out small claims as necessary, knowing if that a "major" event ever happens, you'll be incapable of paying claims, will declare bankruptcy, and will keep all prior profits that were already extracted from the company.Their business model fails one of the fundamental tests of an insurable risk - the potential losses here are not finite, nor for that matter are they random. If Blizzard has a significant outage, their entire "insurance" model is virtually guaranteed to go out of business because they will be incapable of paying claims, because EVERYONE will have a claim at once. No legitimate insurance company would ever function in a space where there is a significant risk that every policy could have a significant claim simultaneously. That's not a risk the insurance company can manage. So it's just a matter of collecting premiums, and possibly paying bona fide small claims, until "the big one" happens and everyone who paid the site loses most of their money.
1-16-2009 @ 10:59AM
I think its interesting that you mention that no "legitimate" insurance company would take on more than it could pay out. Have you been watching the news over the last 4 months? Do you understand the Credit Default Swap market? This is EXACTLY that several large Banks and Insurance companies did. They took on more risk than they could ever pay out and now we are all feeling the effects.So I don't believe their aren't "legitimate" companies that did exactly that.As for those of you equating this a Madoff scheme, its not the same. In a classic Ponzi scheme you take money from the initial investors. You then promise them some amazing return. You recruit a new set of investors with the same promises and use their money to pay out the first set of people. Repeat this process over and over. The guys in first get some money and it all looks legit, the last guy in gets screwed and the planner walks out with a large part of everyone's money. In the case of You Play or We Pay they have it structured just like insurance. Its up to the individual to decide for themselves if they feel its worth it. Personally I don't think it is, after all I can manage my life if I can't play WoW for a few days one month. Home insurance is worth it for me because it would be difficult to manage if I didn't have my home for a few days and had no other options.
First time? A confirmation email will be sent to you after submitting.
Members enter your username and password.
Enter your AOL or AIM screenname and password.
Please keep your comments relevant to this blog entry. Email addresses are never displayed, but they are required to confirm your comments.
When you enter your name and email address, you'll be sent a link to confirm your comment, and a password. To leave another comment, just use that password.
To create a live link, simply type the URL (including http://) or email address and we will make it a live link for you. You can put up to 3 URLs in your comments. Line breaks and paragraphs are automatically converted — no need to use <p> or <br /> tags.