I'm an entrepreneur so I love thinking about things just a little bit differently than the "I've been doing this for 20 years" types I compete against. So take off that narrow experience hat and open your mind for a minute.
If a flood comes through and destroys a bunch of cars, guess who is going to be selling a bunch of cars once the insurance claims pay out? On a slightly less direct path, if there's a wheat crop failure and the crop insurance has to pay out, guess what also happens to the price of wheat? The point is that every disaster has someone who benefits monetarily from that disaster. So it's not a zero sum game once you move outside the Excel spreadsheet and into the real world. The real world is messy, you can't just sign a nice clean reinsurance policy with a car manufacturer, but it's not outside the realm of reason that a smart motivated entrepreneur could develop a product that helped lay off the risk from the final reinsurer.
I was in insurance 20 years ago for brief time, hated it so decided to do something else.
Because I'm a very little part of this universe, I admit openly there must be things I have no idea about. Hence I said I'm open to hear from you specific examples. If you're not aware of any such solutions then what are we talking about?
I'm not sure you understand how insurance works. You can only pool the risks (aka diversify), you can't "lay off" (in hedge sense) risk. It doesn't matter what product someone offers, it can only transfer that risk on someone else.
I agree with you that this is not a zero sum game in the real world. But having said that, this is exactly why your further reasoning is flawed. If everything in life was a zero sum game, then there could be (theoretically) a way to hedge some risks. Since property/life gets destroyed permanently, at least parts of it, it is not a zero sum game, and you can not "hedge" that part of risk, only transfer it.
As a logical consequence of the above, notice that when (thanks to the mother nature, bad luck, act of God, Murphy law or whatever you want to call it) number of claims raises significantly then ALL insured need to pay higher premiums (then need to "chip in" more to the risk pool) regardless of the fact who was recently affected.
The examples you made (i.e. about flooded vehicles), yes you can extract some value from them (and it will be reflected in insurance company balance sheet) but regardless, some amount of materials and workmanship (or life, in the worst case) get's destroyed permanently and that's part of the equation that could never be "hedged" and has to be paid out from the premiums collected from ALL insured.
Think about for a minute: you could be paying insurance premiums all your life and never had any claims. What does that mean to you? Do you feel robbed of all that money? Do you think that 100% of your paid premiums are 100% profit to ins company?
