6 ms·

Why would they lower prices? The government mandates we MUST have insurance, so they know they've got a continued source of business. They'll simply increase

by tw04 10y ago

Why would they lower prices? The government mandates we MUST have insurance, so they know they've got a continued source of business. They'll simply increase profits. The average American has absolutely no way to correlate the amount they pay for insurance to what it costs the insurance company.

lg 10y ago
competition?
- techdmn 10y ago
  I'm convinced that the ability to shop for and purchase auto insurance online is the best thing (for consumers) to happen to the industry in a long time. Better rates, better claims processing, better customer service.
bjterry 10y ago
They can't do that because other companies will undercut them to gain market share. They could collude to set prices, but that's illegal in the US. Also, some auto insurance companies aren't organized as corporations, such as the Auto Club of Southern California, which is a not-for-profit mutual. They aren't saints, but since they redistribute most of their profits to policyholders, they don't really have much incentive to keep prices high.
- cmdrfred 10y ago
  > They could collude to set prices, but that's illegal in the US. Interestingly, that is not true for insurance companies[0], at least at the federal level. They are exempt from a lot of federal law. >The McCarran–Ferguson Act, 15 U.S.C. §§ 1011-1015, also known as Public Law 15,[1] is a United States federal law that exempts the business of insurance from most federal regulation, including federal antitrust laws to a limited extent. [0]https://en.wikipedia.org/wiki/McCarran%E2%80%93Ferguson_Act https://en.wikipedia.org/wiki/McCarran%E2%80%93Ferguson_Act
- jedmeyers 10y ago
  Corporations have been doing illegal things for a while now. All you have to do is to share a reasonable part of illegal proceedings with the government - it's called a 'fine'.
  - JBReefer 10y ago
    Please don't be edgy and dismissive on HN
    - jedmeyers 10y ago
      I am not edgy, I am pointing out that just if something is 'illegal' it does not mean corporations won't do it.
      - pyre 10y ago
        The fact that something is illegal means that there is a risk in doing it, and a cost in hiding it. It's not quite the same situation as if colluding were completely legal and above-the-board.
      - eon1 10y ago
        Fair point, and in the context of Uber, this is particularly true
notatoad 10y ago
Only if the industry as a whole agrees to not cut rates, and nobody new enters the market. In a competitive market, if the cost goes down (as would happen with fewer accidents) then the rates will drop. I'm curious if we could see a future where the car manufacturers provide insurance for their product, and you would buy a combined hardware/software/updates/insurance subscription package from a manufacturer. It seems like the inevitable conclusion of all the debate around who's ultimately responsible for the actions a self-driving car takes.
klipt 10y ago
If a large company like Google, Tesla or Uber owns a fleet of self driving cars, they can just self-insure. (The claims will average out to a well understood statistical distribution, and they simply set aside enough money to pay those claims.)
hyperbovine 10y ago
> The government mandates we MUST have insurance, so they know they've got a continued source of business. The average American has absolutely no way to correlate the amount they pay for insurance to what it costs the insurance company. I have a hard time reconciling these two sentences. In the first, you sound like a passionate advocate of the free market. In the second, you act as though you have never heard of such a thing. N.b. Personally, I am much happier knowing that (almost) all the people potentially plowing into me on the highway carry insurance.
- undersuit 10y ago
  Free Market is the US does not contain a well-informed consumer segment. That is the issue of the second sentence. >N.b. Personally, I am much happier knowing that (almost) all the people potentially plowing into me on the highway carry insurance. Do you live in the US? Where 1 in 7 drivers are uninsured?
  - hyperbovine 10y ago
    > Free Market is the US does not contain a well-informed consumer segment. So the claim boils boils down to, people don't know how to shop around for auto insurance? Forgive me for scoffing. And 1 in 7 is a lot lower than it would be otherwise.
    - undersuit 10y ago
      Just because I can buy the same product from a number of different stores doesn't make me a well-informed consumer.
  - cmdrfred 10y ago
    Exactly, and keep in mind many states have moved to a 'no-fault' model. So they don't actually care who is at fault for the accident anymore. So the question becomes, why doesn't everyone just insure themselves (IE. Their own car/medical bills to the level they are comfortable with) rather than insuring everyone else and praying the guy that hit you does the same.
dragonwriter 10y ago
> The government mandates we MUST have insurance Actually, in California, the government does not. You must have either a certain specified minimum level of insurance or a post a specified minimum surety bond.
- busyant 10y ago
  This sounds like a distinction without much of a difference.
  - dragonwriter 10y ago
    It makes a difference because insurance companies don't have unlimited ability (even collectively) to set prices, since there if an alternative that they don't control.
koenigdavidmj 10y ago
> The government mandates we MUST have insurance This becomes absurd with self-driving cars. There are three types of collisions with human-driven cars: 1. Those caused by driver negligence. 2. Those caused by the owner failing to properly maintain their vehicle. 3. Those caused by a manufacturing defect. With self-driving cars, the first one is impossible. A car that follows the law to the letter is by definition never at fault in a collision. The second one is still possible, but probably less likely. The car can take itself to the shop without your intervention, and I expect manufacturers would have it refuse to drive itself if you're too far off the maintenance schedule. The third category will now include bugs in the driving software, so the rate of collisions that fall under option 3 is likely to go up a bit. Option 3 means that the manufacturer is liable, not the owner of the car. Since this encompasses the vast majority of self-driving car collisions, personal liability will no longer be truly necessary like it is today.
- objclxt 10y ago
  > With self-driving cars, the first one is impossible. A car that follows the law to the letter is by definition never at fault in a collision. You can still be "at fault" even if you followed the law in a collision. Laws - particularly driving laws - are not always black and white.
SilasX 10y ago
No, it (quite reasonably!) mandates that you must prove financial responsibility to a certain level[1] if you're going to pilot a two-ton hunk of metal at 70 mph around other people doing the same. That has the side effect of requiring the typical person to buy insurance, as they can't afford the alternate means of establishing it. Do you think that's somehow unreasonable? What standard would you prefer for determining when an activity should require such advance indemnification, and how does "driving a car" fail that? Edit: Sorry if you just meant to make the bland, neutral point that more casualties -> more insurance revenue -> more insurance profit, but your tone suggested you think it's an unfair subsidy somehow. [1] It varies, but here's California's form for alternately proving responsibility, which only requires you put up a bond of $35k, which IMHO is ridiculously low considering how much you could fairly be held liable for. I guess the logic is that "if you don't mind setting aside that much money, you must have enough seize-able assets in case you harm someone"? https://www.dmv.ca.gov/portal/wcm/connect/3a81272a-0834-43b6-b3dc-b6965f799d80/reg5085.pdf?MOD=AJPERES https://www.dmv.ca.gov/portal/wcm/connect/3a81272a-0834-43b6...
- cmurf 10y ago
  Most any reasonable person can make ~$1500 a year investing that $35K. So it doesn't seem like such a good savings considering you won't make that money on investing it, and you're almost certain to lose a lot more than than $35K if you're at fault in an accident.
BurningFrog 10y ago
If that is true, why don't they increase profits already? Why wait until self driving cars have arrived?
tomjen3 10y ago
The I will buy 1 usd nominal insurance from my car manufacturer along with buying the car. Or more likely get it for free with my accident and theft insurance.

by tw04 10y ago

lg 10y ago

competition?

techdmn 10y ago
I'm convinced that the ability to shop for and purchase auto insurance online is the best thing (for consumers) to happen to the industry in a long time. Better rates, better claims processing, better customer service.

bjterry 10y ago

They can't do that because other companies will undercut them to gain market share. They could collude to set prices, but that's illegal in the US. Also, some auto insurance companies aren't organized as corporations, such as the Auto Club of Southern California, which is a not-for-profit mutual. They aren't saints, but since they redistribute most of their profits to policyholders, they don't really have much incentive to keep prices high.

cmdrfred 10y ago
> They could collude to set prices, but that's illegal in the US. Interestingly, that is not true for insurance companies[0], at least at the federal level. They are exempt from a lot of federal law. >The McCarran–Ferguson Act, 15 U.S.C. §§ 1011-1015, also known as Public Law 15,[1] is a United States federal law that exempts the business of insurance from most federal regulation, including federal antitrust laws to a limited extent. [0]https://en.wikipedia.org/wiki/McCarran%E2%80%93Ferguson_Act https://en.wikipedia.org/wiki/McCarran%E2%80%93Ferguson_Act
jedmeyers 10y ago
Corporations have been doing illegal things for a while now. All you have to do is to share a reasonable part of illegal proceedings with the government - it's called a 'fine'.
- JBReefer 10y ago
  Please don't be edgy and dismissive on HN
  - jedmeyers 10y ago
    I am not edgy, I am pointing out that just if something is 'illegal' it does not mean corporations won't do it.
    - pyre 10y ago
      The fact that something is illegal means that there is a risk in doing it, and a cost in hiding it. It's not quite the same situation as if colluding were completely legal and above-the-board.
    - eon1 10y ago
      Fair point, and in the context of Uber, this is particularly true

notatoad 10y ago

Only if the industry as a whole agrees to not cut rates, and nobody new enters the market. In a competitive market, if the cost goes down (as would happen with fewer accidents) then the rates will drop. I'm curious if we could see a future where the car manufacturers provide insurance for their product, and you would buy a combined hardware/software/updates/insurance subscription package from a manufacturer. It seems like the inevitable conclusion of all the debate around who's ultimately responsible for the actions a self-driving car takes.

klipt 10y ago

If a large company like Google, Tesla or Uber owns a fleet of self driving cars, they can just self-insure. (The claims will average out to a well understood statistical distribution, and they simply set aside enough money to pay those claims.)

hyperbovine 10y ago

> The government mandates we MUST have insurance, so they know they've got a continued source of business. The average American has absolutely no way to correlate the amount they pay for insurance to what it costs the insurance company. I have a hard time reconciling these two sentences. In the first, you sound like a passionate advocate of the free market. In the second, you act as though you have never heard of such a thing. N.b. Personally, I am much happier knowing that (almost) all the people potentially plowing into me on the highway carry insurance.

undersuit 10y ago
Free Market is the US does not contain a well-informed consumer segment. That is the issue of the second sentence. >N.b. Personally, I am much happier knowing that (almost) all the people potentially plowing into me on the highway carry insurance. Do you live in the US? Where 1 in 7 drivers are uninsured?
- hyperbovine 10y ago
  > Free Market is the US does not contain a well-informed consumer segment. So the claim boils boils down to, people don't know how to shop around for auto insurance? Forgive me for scoffing. And 1 in 7 is a lot lower than it would be otherwise.
  - undersuit 10y ago
    Just because I can buy the same product from a number of different stores doesn't make me a well-informed consumer.
- cmdrfred 10y ago
  Exactly, and keep in mind many states have moved to a 'no-fault' model. So they don't actually care who is at fault for the accident anymore. So the question becomes, why doesn't everyone just insure themselves (IE. Their own car/medical bills to the level they are comfortable with) rather than insuring everyone else and praying the guy that hit you does the same.

dragonwriter 10y ago

> The government mandates we MUST have insurance Actually, in California, the government does not. You must have either a certain specified minimum level of insurance or a post a specified minimum surety bond.

busyant 10y ago
This sounds like a distinction without much of a difference.
- dragonwriter 10y ago
  It makes a difference because insurance companies don't have unlimited ability (even collectively) to set prices, since there if an alternative that they don't control.

koenigdavidmj 10y ago

> The government mandates we MUST have insurance This becomes absurd with self-driving cars. There are three types of collisions with human-driven cars: 1. Those caused by driver negligence. 2. Those caused by the owner failing to properly maintain their vehicle. 3. Those caused by a manufacturing defect. With self-driving cars, the first one is impossible. A car that follows the law to the letter is by definition never at fault in a collision. The second one is still possible, but probably less likely. The car can take itself to the shop without your intervention, and I expect manufacturers would have it refuse to drive itself if you're too far off the maintenance schedule. The third category will now include bugs in the driving software, so the rate of collisions that fall under option 3 is likely to go up a bit. Option 3 means that the manufacturer is liable, not the owner of the car. Since this encompasses the vast majority of self-driving car collisions, personal liability will no longer be truly necessary like it is today.

objclxt 10y ago
> With self-driving cars, the first one is impossible. A car that follows the law to the letter is by definition never at fault in a collision. You can still be "at fault" even if you followed the law in a collision. Laws - particularly driving laws - are not always black and white.

SilasX 10y ago

No, it (quite reasonably!) mandates that you must prove financial responsibility to a certain level[1] if you're going to pilot a two-ton hunk of metal at 70 mph around other people doing the same. That has the side effect of requiring the typical person to buy insurance, as they can't afford the alternate means of establishing it. Do you think that's somehow unreasonable? What standard would you prefer for determining when an activity should require such advance indemnification, and how does "driving a car" fail that? Edit: Sorry if you just meant to make the bland, neutral point that more casualties -> more insurance revenue -> more insurance profit, but your tone suggested you think it's an unfair subsidy somehow. [1] It varies, but here's California's form for alternately proving responsibility, which only requires you put up a bond of $35k, which IMHO is ridiculously low considering how much you could fairly be held liable for. I guess the logic is that "if you don't mind setting aside that much money, you must have enough seize-able assets in case you harm someone"? https://www.dmv.ca.gov/portal/wcm/connect/3a81272a-0834-43b6-b3dc-b6965f799d80/reg5085.pdf?MOD=AJPERES https://www.dmv.ca.gov/portal/wcm/connect/3a81272a-0834-43b6...

cmurf 10y ago
Most any reasonable person can make ~$1500 a year investing that $35K. So it doesn't seem like such a good savings considering you won't make that money on investing it, and you're almost certain to lose a lot more than than $35K if you're at fault in an accident.

BurningFrog 10y ago

If that is true, why don't they increase profits already? Why wait until self driving cars have arrived?

tomjen3 10y ago

The I will buy 1 usd nominal insurance from my car manufacturer along with buying the car. Or more likely get it for free with my accident and theft insurance.