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Insurance as a business relies a lot on past actuarial table data to draw up algorithms to price the premiums. It contains factors like gender, age, occupation
by thisisit 9y ago
Insurance as a business relies a lot on past actuarial table data to draw up algorithms to price the premiums. It contains factors like gender, age, occupation etc and the car, which is the highlight here.
If insurance companies do find data supporting the fact that these cars are less prone to payouts, due to Autopilot, they will decrease the premiums. So I am confused what is this whole "car insurance world upside down" all about?
The interesting is this:
> "If we find that the insurance providers are not matching the insurance proportionate to the risk of the car then if we need to we will in-source it," Tesla CEO Elon Musk said in February.
So Tesla as a business recognizes the cost of car has gone up due to insurance and might be actively working on subsidizing the costs.
It can either by paying some part of insurance or providing data on crashes. If it is latter, you have to wonder what kind of business Liberty Mutual is running. Any company will always say their wares are safer but it's up to the insurance companies to collect data and verify.
- dbrian 9y agoHe is implying that the algorithms used by insurance companies are optimizing for profit instead of solely accessing the risk of payout. In other words, Tesla drivers are willing to pay a higher premium to mitigate the same risk.
- dogruck 9y agoIn the competitive car insurance market, how can you optimize for profit without incorporating the risk of payout?
- microcolonel 9y agoMaybe there's something preventing the car insurance market from being competitive, who knows.
- dogruck 9y agoAre you implying collusion? Have you noticed the massive amount of money the competing car companies spend on advertising? Have you ever suspected collusion when you shopped for your own car insurance?
- wtallis 9y ago> Have you noticed the massive amount of money the competing car companies spend on advertising? Have you ever suspected that maybe they put so much effort into advertising because it takes a lot to get someone to bother to switch insurers?
- dogruck 9y agoWhy do you think people are reluctant to switch? Perhaps because the market is so competitive that there really isn't much difference between the offerings?
- pwinnski 9y agoAll these hypotheticals! I don't switch because it's a pain to even try. I've had experiences in which a price I was quoted turned out to be lower than I was actual billed, so I don't have a lot of confidence that I'll get a straight answer if I do ask for quotes for new companies. I'm not sure I have accurate answers for questions they might ask. So I keep paying whatever, even though it's more than I like. For all I know, I could be paying half as much elsewhere. This is just the company I've been with for many, many years.
- dogruck 9y agoYes, it is a multidimensional competition. Price is not the only variable. So is service when you make a claim (I've been "screwed over" twice when making car insurance claims). And so is obfuscation of services provided. So is money spent on advertising. And lobbying. All insurance companies compete with a unique strategy on the mix of variables.
- 9y ago
- afarrell 9y agoThats not what the parent is saying. The parent is saying that, in the same way that retailers might act on the knowledge that OSX users are willing to pay higher prices for goods, insurers act on the knowledge that Tesla drivers are more risk-averse.
- deleted 9y ago[deleted]
- Spooky23 9y agoIts a pretty bold accusation. Car insurance is probably the most competitive market out there. Why would dozens of car insurers in multiple states collude to hurt poor Tesla and put themselves at risk of Federal and State sanction? If they were doing that for a tiny niche automaker like Tesla, why wouldn’t they screw over BMW or Lexus? This whole controversy is just a distraction to draw attention from Tesla’s service practices and support for a integrated “car as a service” model where Tesla owns financing, sales and insurance.
- afarrell 9y ago> why wouldn't they screw over BMW and Lexus? Because Tesla markets itself as "the safest car on the road". > collude Who is saying anything about collusion?
- Spooky23 9y agoSo did Volvo for decades. You didn’t need magic Volvo insurance. When you have a highly competitive market, and most participants decide to make an identical business decision that isn’t in their competitive interest (ie charge a high margin for a commodity), that’s generally accepted as evidence of collusion.
- Spooky23 9y agoTesla is a super risky piece of kit for an insurer. They are a sole source provider of sorts and maintain a tight lock on authorized body shops. Even a car with lots of low volume high cost parts like a Benz has a competitive market of resellers, dealers and service providers. Tesla is the problem here. Having them be an insurance provider just makes them a bigger problem.
- greglindahl 9y agoCan you name any aluminum-bodied car that doesn't lock down authorized body shops?
- Spooky23 9y agoI know that BMW has 50+ in my state, and that Tesla recently doubled their authorized body shop count — to 2.
- greglindahl 9y agoAnd all 50+ BMW authorized body shops can work on BMW's aluminum-bodied cars? Only a modest % of BMW's cars are aluminum-bodied. A little googling shows sentences like "Any body shop you are considering to repair your BMW 5 and 6 series, should be specifically equipped to perform special aluminum welding." and "As part of our CERTIFICATIONS by various manufacturers, we are required to purchase state of the art tools specifically for aluminum repair."
- thisisit 9y agoI might have missed it. Which line implies that? Additionally how does that turn the car insurance world upside down?
- pbz 9y ago"It contains factors like gender, age, occupation etc and the car, which is the highlight here." -- also a big portion of it is your credit score, which, in my opionion, should not be a factor, but it is...
- dogruck 9y agoThere are a number of data provider startups with the business model of providing insurance companies with innovative data sets that are proven to be predictive of payout rates. In time, I suspect the coarse proxy of credit score will be supplanted by new data.
- FLUX-YOU 9y ago>they will decrease the premiums Idk, I was told point blank that my premiums went up because the company/local insurance agent was struggling. Had nothing to do with my driving. I might get some sticker price reduction, but I'll end up paying for it down the line somewhere. Insurance isn't primarily about the collective good, so despite technology making us safer, they still have to make profits.