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Its also likely that there will come a time when this data will be used to help price your car if you sell it or trade it in. That, at least, is potentially de

Its also likely that there will come a time when this data will be used to help price your car if you sell it or trade it in. That, at least, is potentially defensible. How the car is treated & how/where it was driven do have a big impact on long term reliability. In fact, if you are a gentle driver who lives in a good location and operates the vehicle under optimal conditions, you could expect to get more for your vehicle- today, because the buyer cannot easily tell, they pay you somewhere in the middle. Insurers will demand this data in before giving you a quote. Same goes here, once it becomes commonplace, insurers will be able to reliability identify "golden goose" customers who, based on driving patterns, are exceptionally unlikely to get in an accident. They will fight eachother tooth and nail for these drivers. I think its inevitable that manufacturers are going to use all this data to stop you claiming under your warranty. "Oh dear you slammed your door too hard one day, I'm afraid that invalidates your warranty". Thankfully we have Magnuson-Moss, so while bad apples might give you the occasional runaround, the law is on your side.

takeda 10y ago
> Same goes here, once it becomes commonplace, insurers will be able to reliability identify "golden goose" customers who, based on driving patterns, are exceptionally unlikely to get in an accident. They will fight eachother tooth and nail for these drivers. I understand that this is what insurers are striving for, and same with good drivers, the problem with it is that personalizing prices to everyone essentially makes insurance useless, since you'll essentially end up paying how much damages would really cost if you had no insurance + extra premium, because insurance wants to make money The whole idea of insurance is that you have a pool of people and there is probability that percentage of it will have an accident, the remaining group subsidizes essentially creating a safety net. All of that is negated when insurance prices individually, since you'll always lose on it.
- bbcbasic 10y ago
  You'd need something akin to Minority Report to get to the point where your premium is what you'll claim. And that would be excellent. Peppercorn insurance for drivers who won't have an accident. Killers will effectively be banned from driving. Zero traffic deaths.
  - takeda 10y ago
    What I'm trying to say in that scenario, I would essentially pay what my damages would cost the insurance + extra premium to pay for insurance employees' salary. In that case, why not just cut out the middle man and pay out of pocket when accident happen, it would be cheaper. Essentially this tendency defeats the purpose of having insurance in the first place.
    - sverige 10y ago
      Actually, insurance premiums are designed to pay 100% of the losses the actuaries predict will occur over a large pool of people. There is a number commonly discussed by insurance companies called the "loss ratio." A loss ratio of 93% (i.e., $93 paid in claims for every $100 collected in premiums) for a year is very good. On the other hand, a loss ratio of 105% or even 110% in a year is not good, but not unheard of. Insurers make their money on investments of premium dollars, not on loss ratios. Sure, they might have a good year or two with low loss ratios, but that means they're collecting too much premium compared to competitors and so may lose market share if the others lower premiums due to more accurate forecasts of losses (closer to 100%). This is one reason insurance marketing and advertising work so hard to drive customer loyalty and retention. So your rates went up even though you didn't have an accident? Better look to see what the stock market has been doing lately.
    - bbcbasic 10y ago
      It's a spectrum with that scenario at one end and at the other end: everyone paying exactly the same amount regardless of age, car, location gender, previous convictions etc. I think that tailoring the premiums based on the driving style is fair, and would give bad drivers the option to improve to reduce their insurance, with the nice side affect of making the roads safer. It isn't going too far down the slope to do this. In the extreme, it would mean everyone would need to become a safer driver or not drive at all, which is probably a good thing. They will become safer drivers then pay a small premium to cover them for chance accidents like a collapsing bridge or a blown out tire.
- PeterisP 10y ago
  It doesn't make insurance useless, in fact it only makes insurance fair - yes, the whole idea of insurance is that you have a pool of people that covers the damage when a small percentage of them have an accident, but people who have twice as large likelihood to have an accident should justly pay twice as much in that pool. The point of insurance is not to have some people cross-subsidize others on average, the point of insurance is that you might prefer to have 100% chance of paying ten bucks instead of 0.1% chance of having to pay ten thousand at a point when that would ruin you - and if you can afford the loss if it happens, then yes, there's no point in insurance for you, it's not a charity where you expect to get a net benefit from the insurance company.
  - woliveirajr 10y ago
    Looking on the other side, from the driver that gets hit: I prefer to everyone having some insurance and paying me when I'm hit than relying that a "good driver had a bad luck". Bad drivers hitting me and don't paying isn't useful, be it paying me directly or reimbursing my insurance company.
- sliverstorm 10y ago
  Only if the probability of a significant accident is 1 (or you have tons of free capital) If your lifetime probability of a $10M accident is 0.01%, it is probably preferable to pool your risk with other drivers of equal risk, and pay $1,000 + small extra premium.

takeda 10y ago

> Same goes here, once it becomes commonplace, insurers will be able to reliability identify "golden goose" customers who, based on driving patterns, are exceptionally unlikely to get in an accident. They will fight eachother tooth and nail for these drivers. I understand that this is what insurers are striving for, and same with good drivers, the problem with it is that personalizing prices to everyone essentially makes insurance useless, since you'll essentially end up paying how much damages would really cost if you had no insurance + extra premium, because insurance wants to make money The whole idea of insurance is that you have a pool of people and there is probability that percentage of it will have an accident, the remaining group subsidizes essentially creating a safety net. All of that is negated when insurance prices individually, since you'll always lose on it.

bbcbasic 10y ago
You'd need something akin to Minority Report to get to the point where your premium is what you'll claim. And that would be excellent. Peppercorn insurance for drivers who won't have an accident. Killers will effectively be banned from driving. Zero traffic deaths.
- takeda 10y ago
  What I'm trying to say in that scenario, I would essentially pay what my damages would cost the insurance + extra premium to pay for insurance employees' salary. In that case, why not just cut out the middle man and pay out of pocket when accident happen, it would be cheaper. Essentially this tendency defeats the purpose of having insurance in the first place.
  - sverige 10y ago
    Actually, insurance premiums are designed to pay 100% of the losses the actuaries predict will occur over a large pool of people. There is a number commonly discussed by insurance companies called the "loss ratio." A loss ratio of 93% (i.e., $93 paid in claims for every $100 collected in premiums) for a year is very good. On the other hand, a loss ratio of 105% or even 110% in a year is not good, but not unheard of. Insurers make their money on investments of premium dollars, not on loss ratios. Sure, they might have a good year or two with low loss ratios, but that means they're collecting too much premium compared to competitors and so may lose market share if the others lower premiums due to more accurate forecasts of losses (closer to 100%). This is one reason insurance marketing and advertising work so hard to drive customer loyalty and retention. So your rates went up even though you didn't have an accident? Better look to see what the stock market has been doing lately.
  - bbcbasic 10y ago
    It's a spectrum with that scenario at one end and at the other end: everyone paying exactly the same amount regardless of age, car, location gender, previous convictions etc. I think that tailoring the premiums based on the driving style is fair, and would give bad drivers the option to improve to reduce their insurance, with the nice side affect of making the roads safer. It isn't going too far down the slope to do this. In the extreme, it would mean everyone would need to become a safer driver or not drive at all, which is probably a good thing. They will become safer drivers then pay a small premium to cover them for chance accidents like a collapsing bridge or a blown out tire.
PeterisP 10y ago
It doesn't make insurance useless, in fact it only makes insurance fair - yes, the whole idea of insurance is that you have a pool of people that covers the damage when a small percentage of them have an accident, but people who have twice as large likelihood to have an accident should justly pay twice as much in that pool. The point of insurance is not to have some people cross-subsidize others on average, the point of insurance is that you might prefer to have 100% chance of paying ten bucks instead of 0.1% chance of having to pay ten thousand at a point when that would ruin you - and if you can afford the loss if it happens, then yes, there's no point in insurance for you, it's not a charity where you expect to get a net benefit from the insurance company.
- woliveirajr 10y ago
  Looking on the other side, from the driver that gets hit: I prefer to everyone having some insurance and paying me when I'm hit than relying that a "good driver had a bad luck". Bad drivers hitting me and don't paying isn't useful, be it paying me directly or reimbursing my insurance company.
sliverstorm 10y ago
Only if the probability of a significant accident is 1 (or you have tons of free capital) If your lifetime probability of a $10M accident is 0.01%, it is probably preferable to pool your risk with other drivers of equal risk, and pay $1,000 + small extra premium.