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What's funny (sad?) is that I don't drive much. I work from home and I rarely leave by car. And I drive a slow, lumbering vehicle so I tend to drive pretty slow

by apercu 8y ago

What's funny (sad?) is that I don't drive much. I work from home and I rarely leave by car. And I drive a slow, lumbering vehicle so I tend to drive pretty slow. I've had 2 tickets in over 20 years of driving, and those were both really minor infractions, and no tickets in the last 10 or so years. I would save money getting one of these devices installed. But there is no way I would opt in for even MORE surveillance. I won't even let my wife install the google or amazon home automation devices. I hate what the internet has become.

Scoundreller 8y ago
The real scam is that they’ll give you a 15-25% reduction in premium, even if you’re driving 80% less than average. I get that some risks are fairly constant (e.g. theft), but premiums could be better correlated to actual risk.
- rebuilder 8y ago
  Why aren't premiums better correlated to risk? It seems like that would be an obvious competitive advantage for an insurance company, if other insurera are mispricing risk.
  - chewz 8y ago
    Because of Pareto principle. 80% of the insurance risk could be estimated with 20% of variables. Which is more then enough because most of the insurance pricing is determined by sales and administration costs and not by price of risk itself.
  - Scoundreller 8y ago
    It’s a mystery to me too. Similarly, the cost savings from increasing my deductible just isn’t there. Going from $1000 to $2000 should be more savings than a handful of dollars per year, since that will save insureco on just about every single claim. There’s no way they’re charging me $100+/month if my risk of a claim is 2-3% per year.
    - tfehring 8y ago
      Increasing your deductible from $1000 to $2000 also eliminates the insurer's claim administrative expenses for claims in the range of, say, $1500 to $2500, since you'll report claims in that range if your deductible is $1000 but not if it's $2000. But insurers' models are complicated. One factor to consider here is that the population with $1000 deductibles isn't the same as the population with $2000 deductibles. For example, some of the latter group have a higher deductible because they're financially stable enough to afford a $2000 emergency expense, but others have it because they're financially unstable enough to need the cheapest coverage they can get. There's a strong negative correlation between an individual's financial stability and their risk to an insurer, so in net, it wouldn't surprise me if the latter group is riskier on average. Also, even if raising your deductible reduces your expected claim costs by more than a handful of dollars per year, insurers in most of the US aren't required to pass that savings on to you - they can price coverage based on your willingness to pay (see [0] and [1]). On the bright side, auto insurance is arguably about the closest thing there is to a perfectly competitive market in the US - your insurer has lots of competitors, and if they're overcharging you relative to your risk, it's easy to find a better deal elsewhere. [0] https://www.naic.org/cipr_topics/topic_price_optimization.htm https://www.naic.org/cipr_topics/topic_price_optimization.ht... [1] https://www.npr.org/2015/05/08/403598235/being-a-loyal-auto-insurance-customer-can-cost-you https://www.npr.org/2015/05/08/403598235/being-a-loyal-auto-...
      - Scoundreller 8y ago
        I’m not in US, which is probably why I dream of your rates. Our government policy (Ontario Canada) is to ask insurers how to reduce premiums, then the government lets them reduce/cap benefits and premiums go up anyway. It’s one of the many markets we would open to more competition. A lot of US insurers would salivate at our rates.
        apercu 8y ago
        Yes, I don't think people outside of Ontario understand how hosed we are on car insurance. I admit we have fraud, but do we have more fraud than norther Illinois? No. Do we have different weather than northern Illinois? Again, no.

by apercu 8y ago

Scoundreller 8y ago

The real scam is that they’ll give you a 15-25% reduction in premium, even if you’re driving 80% less than average. I get that some risks are fairly constant (e.g. theft), but premiums could be better correlated to actual risk.

rebuilder 8y ago
Why aren't premiums better correlated to risk? It seems like that would be an obvious competitive advantage for an insurance company, if other insurera are mispricing risk.
- chewz 8y ago
  Because of Pareto principle. 80% of the insurance risk could be estimated with 20% of variables. Which is more then enough because most of the insurance pricing is determined by sales and administration costs and not by price of risk itself.
- Scoundreller 8y ago
  It’s a mystery to me too. Similarly, the cost savings from increasing my deductible just isn’t there. Going from $1000 to $2000 should be more savings than a handful of dollars per year, since that will save insureco on just about every single claim. There’s no way they’re charging me $100+/month if my risk of a claim is 2-3% per year.
  - tfehring 8y ago
    Increasing your deductible from $1000 to $2000 also eliminates the insurer's claim administrative expenses for claims in the range of, say, $1500 to $2500, since you'll report claims in that range if your deductible is $1000 but not if it's $2000. But insurers' models are complicated. One factor to consider here is that the population with $1000 deductibles isn't the same as the population with $2000 deductibles. For example, some of the latter group have a higher deductible because they're financially stable enough to afford a $2000 emergency expense, but others have it because they're financially unstable enough to need the cheapest coverage they can get. There's a strong negative correlation between an individual's financial stability and their risk to an insurer, so in net, it wouldn't surprise me if the latter group is riskier on average. Also, even if raising your deductible reduces your expected claim costs by more than a handful of dollars per year, insurers in most of the US aren't required to pass that savings on to you - they can price coverage based on your willingness to pay (see [0] and [1]). On the bright side, auto insurance is arguably about the closest thing there is to a perfectly competitive market in the US - your insurer has lots of competitors, and if they're overcharging you relative to your risk, it's easy to find a better deal elsewhere. [0] https://www.naic.org/cipr_topics/topic_price_optimization.htm https://www.naic.org/cipr_topics/topic_price_optimization.ht... [1] https://www.npr.org/2015/05/08/403598235/being-a-loyal-auto-insurance-customer-can-cost-you https://www.npr.org/2015/05/08/403598235/being-a-loyal-auto-...
    - Scoundreller 8y ago
      I’m not in US, which is probably why I dream of your rates. Our government policy (Ontario Canada) is to ask insurers how to reduce premiums, then the government lets them reduce/cap benefits and premiums go up anyway. It’s one of the many markets we would open to more competition. A lot of US insurers would salivate at our rates.
      - apercu 8y ago
        Yes, I don't think people outside of Ontario understand how hosed we are on car insurance. I admit we have fraud, but do we have more fraud than norther Illinois? No. Do we have different weather than northern Illinois? Again, no.