Robert Shiller, teaching Yale's Financial Markets course, argues that insurance is the clearest working model of risk pooling in the financial system and spends this lecture testing that model against its failures. He opens with the core mechanics of insurance and the twin problems of moral hazard and adverse selection, then traces the history of AIG from Cornelius Vander Starr's 1919 founding in Shanghai through Hank Greenberg's tenure to the 2008 government bailout. He covers regulation, including state guarantee funds, the 1945 McCarran-Ferguson Act, and Dodd-Frank's effect on insurers, before turning to life and health insurance and the 2010 U.S. health care overhaul. He closes with catastrophe insurance, using earthquake coverage in Haiti and catastrophe bonds in Mexico to ask how well insurance actually copes with large-scale disaster.