Gambling is bigger—more popular, more widespread, more accessible—than ever. It’s also as old as human civilization itself.
And for almost as long as people have been gambling, they’ve also been buying insurance—both ways of making bets on uncertain futures. More on that soon.
But first, a brief history. For thousands of years, gambling has been deeply embedded in the cultural, social, and economic fabric of civilization. Ancient Egyptians, Chinese, Greeks, and many others all engaged in some form of gambling.
Humans and gambling: A complicated history
But just because humans have always gambled doesn’t mean they’ve always felt good about it. For as long as humans have been gambling, they have grappled with complicated feelings toward it. Sometimes viewed as a bit of fun, sometimes as a politically sanctioned way to raise state capital, sometimes as a social vice, and sometimes as all of the above, gambling has been subject to a wide array of regulations, laws, bans, pontifications, and even investments throughout the centuries.
In the 1900s, gambling—then associated with some of the greatest “societal ills”—debt, avarice, poverty, and laziness—was made illegal in the US. As the Great Depression took hold in the 1930s, more and more people turned to gambling out of desperation. It was eventually embraced by both the stock market and the state, becoming an important financial instrument for boosting the economy and raising state capital. During this period, the first state lotteries were established, and the first casinos were legalized (Vegas, Baby!).
But despite getting its official stamp from state governments, ambivalence toward gambling persisted. Throughout the 20th century, it remained heavily regulated. A 1992 law passed by Congress essentially made sports betting illegal, and when this law was overturned in 2018 by the Supreme Court on the grounds of state rights, sports betting blew up–mostly online, where regulation remains lax.
The rise of the “casino economy”
And that’s in part how we find ourselves in the position we are in today. In a time not entirely unlike the Great Depression, defined by uncertainty, distrust in institutions, and economic disparity, gambling has once again become commonplace, and, for many, a means of achieving some kind of stability.
We just might be living in what economic writer and commentator Kyla Scanlon has called the “Casino Economy,” where everything is a risk that can be monetized and bet on.
Nothing, it seems, is off limits.
Apps like Kalshi have created prediction markets where users can place bets on world events—such as whether the Fed will raise interest rates, election outcomes, which movie will win Best Picture at the Oscars, or whether a hurricane will make landfall. Coverd is “gamifying” consumer debt, creating a market where users can leverage credit card debt to win perks and cash back; Cheddr is an online sports gambling app targeting young people, branding itself as the “TikTok of sports betting.”
In a world with more perceived uncertainty than ever, there is just simply more to bet on.
This, according to Scanlon, is what happens when the once well-trodden pathways to stability and success begin to erode: suddenly, it makes more sense to risk everything, with the possibility of winning big, than to put the time, effort, and patience into taking a more traditional path that, by so many accounts, is unlikely to pay off. In this economy, gambling can seem more reasonable than college. Just ask young men of a certain age.
Gambling and insurance
What does any of this have to do with insurance?
A lot, actually. In fact, insurance and gambling go way back, so far back that it can be difficult to distinguish between the two.
In 1997, Tim Harford, a BBC journalist, asked the question: what makes gambling wrong but insurance bad? His article on the topic draws a direct line between gambling and insurance, recounting a brief history of Lloyd’s of London, now one of the world’s largest insurers. Lloyd’s began in a coffee house, where patrons would go to gossip and place their bets on things like … which ships would or would not deliver their cargo safely to port. It also became a place where these same ships could be insured.
“If someone wished to insure a ship, that could be done too: a contract would be drawn up, and the insurer would sign his name underneath – hence the term “underwriter”. It became hard to say quite where coffee-house gambling ended and formal insurance began.”
In this way, insurance companies are (and always have been) betting on you. They are betting that you won’t file that claim—that you won’t get in that car accident, that your house won’t flood in the next storm, that your email servers won’t be the victim of a cyberattack, that your ship won’t be intercepted by pirates or shipwrecked by a cyclone before making it safely to port.
But insurance companies can also bet against you. They can bet on your life—that you will in fact die and get paid your death benefit. That’s why there is a market for selling life insurance policies back to insurers.
Indeed, insurance can be hard to distinguish from gambling.
But insurance isn’t just a gamble for insurance companies; it’s a gamble for customers too. When we, as customers, buy insurance, we are essentially making a bet that the price we pay in premiums will be less than the payout from our claims, should something happen–God forbid. We are, in effect, making the opposite gamble of the insurance companies. We are betting against ourselves.
To further complicate matters, financial markets are increasingly treating insurance itself as a subject of speculation. Following the Los Angeles wildfires, hedge funds began buying insurers’ rights to recover money from Southern California Edison if the utility is ultimately found liable for causing the fires. In other words, investors are now wagering not just on disasters themselves, but on who will ultimately bear the financial responsibility for them. In the casino economy, even insurance claims can become speculative assets.
Insurance, of course, isn’t just gambling. Less cynically, it can also be a way to purchase peace of mind. But thanks to current market conditions, recent events, and the casinofication of our economy, insurance for many people is feeling less like the latter and more like the former. If you need convincing, just spend a few minutes scrolling through this Reddit thread.
As risk rises across the board—climate risk, economic risk, etc.—so do insurance premiums. And as risk and premiums go up, so does the frequency of stories about insurance companies acting in bad faith: denying valid claims, dragging out claim processing, avoiding accountability, etc. Think back to high-profile events like the LA fires, and you’ll know exactly what I’m talking about (and so will many current and future policyholders). These factors, combined with the more commonplace experiences of customers navigating (successfully or not) the grueling claims process, sow further seeds of doubt.
In this context, insurance starts to feel like a double wager: a bet against yourself that something bad will happen, and, assuming it does, a bet on whether you will even get your claim paid at all.
How to make insurance feel less like gambling
As UX designers who work in insurance, we understand that some of what makes insurance seem like betting is built into the business model. But insurance doesn’t have to feel like gambling. The vibes (in today’s parlance) can shift. At its best, insurance offers something gambling never can: a guarantee that if life takes an unexpected turn, you won’t have to face the financial consequences alone. That’s what makes insurance more than a game of chance. In a world with few guarantees, insurance can be just that.
Here are a few of the many actionable ways the insurance industry can make buying insurance feel less like rolling the dice and more like securing peace of mind.
1. Take a page from mutual insurance. Redefine insurance as risk sharing rather than risk trading.
To understand how the insurance industry can orchestrate a vibe shift of its own, it’s useful to look to an alternative history of insurance that isn’t rooted in gambling. Mutual insurance.
In the same BBC article, Harford lays it out plainly:
“But not all modern insurers have their roots in gambling. Another form of insurance developed not in the ports, but the mountains.
Alpine farmers organized mutual aid societies in the early 16th century, agreeing to look after each other if a cow – or child – fell ill. While the underwriters of Lloyd’s viewed risk as something to be analyzed and traded, the mutual assurance societies of the Alps saw it as something to be shared.
And when the farmers descended from the Alps to Zurich and Munich, they established some of the world’s great insurance companies.”
When societies invest in reducing risk, not just in monetizing it (as is largely happening today), individuals, economies, and societies can thrive. It turns out that the peace of mind insurance can buy pays dividends too. Just look at how government subsidies, which are in part insurance policies against crop failure, have allowed the farming industry in the US to flourish. When societies and individuals share risk, it empowers everyone.
In the uncertain times we live in, where everything can feel like a scam, this may be a much more compelling story than the one the insurance industry is offering today.
2. Make insurance valuable before a claim happens.
A recent LIMRA report explores how embedding “living benefits” into traditional life insurance products is making the product more attractive to next-generation consumers, who may be skipping some of the more traditional entry points.
“Living benefits” can include things like cash access, wellness incentives, critical illness coverage, and even long-term care insurance. Thinking about how insurance can become an accessible resource, not just a distant and abstract promise, is one of the simplest ways to make insurance feel less like a gamble.
The idea of “living benefits” can be applied to other lines of business as well, from car insurance to homeowners insurance and beyond, each with its own equivalent.
In car insurance, roadside assistance and concierge services after an accident or breakdown have long existed in some form or another. In an attempt to transform from a mere claims payer to full-on mobility partner, some companies are now exploring deeper benefits—such as parking assistance, trip planning, and EV charging optimization.
In homeowners insurance, similar trends are underway. The advent of IoT technology and the concept of the “connected home” have allowed insurers to do more for their customers than just pay out claims; they can help them actually manage risk. Which leads to our next point.
3. Help customers prevent risk, not just recover from it.
A few years ago, Cake & Arrow conducted a research study with homeowners who had been affected by climate change in one way or another; one of the most consistent things we heard from homeowners was that they wished their insurance companies would do more to help them protect their homes from risk. As one homeowner explained:
“I wish they [insurers] would just be more transparent about the climate in our area. What do they know that we don’t know? I want to be more aware, so I know what I can do to protect my home.”
Not only do customers want more support from their insurance companies, but many also believe these companies have information and data that can help them and aren’t sharing it.
Insurance companies can empower policyholders by sharing more personalized risk insights and helping them take action. From highlighting wildfire or water damage risks to sending severe weather alerts or recommending preventative measures like leak sensors, insurers can help customers reduce the likelihood of a loss. This approach not only builds trust—it creates better outcomes for both policyholders and insurers.
As another homeowner put it:
“Insurers have to make money. I get it. But there’s definitely more they can do to help me learn how to protect my home. If something happens, the less of a claim I make, the less money they have to pay out. I feel safer, and they can save money. It’s good for them, and it’s good for me.”
Companies like Mitigrate and Faura are actively trying to make insurance as much about being a stopgap against risk as about preventing losses in the first place. In this way, insurance becomes both less of a gamble for insurers and customers alike.
4. Improve the claims experience by reducing uncertainty.
Insurance will always deal in uncertainty—it is at the very heart of why insurance exists. But there are uncertainties within insurance products themselves that can be controlled and even eliminated—namely, uncertainty about whether or not a claim will be paid.
Customers will always be uncertain about whether they’ll ever need their insurance. They shouldn’t also have to wonder whether it will work for them if and when they do.
When filing claims, policyholders often wonder things like:
- Will this damage actually be covered?
- Will an exclusion apply?
- Will the adjuster agree with my assessment?
- How long will it take?
- How much will I actually receive?
Simplifying product language and introducing steps to ensure customers fully understand what they are buying is the first step in reducing uncertainty, but making the claims process simple, easy to navigate, and transparent is the next.
Claims are at the core of the insurance customer experience; in some respects, they are the customer experience, yet they often receive the least attention from a product and CX standpoint. And many claims processes not only remain outdated and full of friction, but can seem this way by design.
In our homeowner research, those who had filed claims all reported complicated, frustrating experiences that required constant follow-up to obtain information about their claims. Making the claims experience transparent and easy to follow is a simple way to ease the burden on policyholders and provide a sense of predictability amid what can often be a scary, uncertain time.
A claims experience concept designed by Cake & Arrow to reduce uncertainty through greater transparency, real-time updates, and clear expectations
Claims experiences that not only set clear expectations in the beginning, but also guide customers through the claims process proactively, allowing them to track their claims status in real time, and reassuring customers that their claims are actively being resolved can go a long way in reducing uncertainty and ultimately, making insurance feel less like a gamble.
5. Borrow the sense of certainty that parametric insurance promises.
Parametric Insurance is another model for reducing uncertainty about whether a claim will be paid. While uncertainty remains about whether the event that triggers the payment will occur, the question of payment does not.
Parametric insurance works differently than traditional insurance. Instead of sending an adjuster to assess damage after a loss, the policy is tied to an objective event. If that event occurs—say a hurricane reaches a certain wind speed or rainfall exceeds a predetermined level—the policy automatically pays out a set amount. There are fewer questions to answer, fewer disputes over coverage, and much more certainty about what customers can expect.
In this way, it removes much of the uncertainty that has traditionally accompanied insurance. Rather than waiting for an adjuster to assess damage or wondering whether an exclusion will apply, policyholders know in advance exactly what event will trigger a payout—and exactly what they’ll receive.
A Cake & Arrow concept for AI-powered dynamic coverage that reduces uncertainty by defining coverage triggers and payouts in advance
Finding ways to make traditional insurance work more like parametric insurance—by reducing ambiguity, increasing transparency, and giving customers greater confidence in when and how they’ll be covered—could be key to making insurance feel less like gambling.
Becoming an institution people can count on
As the “casino economy” grows, more and more parts of everyday life are beginning to feel like games of chance. Financial markets, debt, investing, even social media increasingly reward people for taking bigger risks with less certainty about the outcome.
Insurance doesn’t have to follow that path.
Insurance will always involve uncertainty. None of us knows if our house will flood, whether we’ll be in a car accident, or when disaster might strike. But customers shouldn’t have to feel uncertain about their insurer, too.
At a time when trust in institutions is at an all-time low, insurance has an opportunity to distinguish itself. Not by promising certainty where none exists, but by becoming an institution people know they can count on when all else fails.
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by Emily Smith Cardineau
