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The insurance industry is notoriously afraid of transparency, and the state-based rate filing system makes it too easy to divide and conquer. This is an industr

The insurance industry is notoriously afraid of transparency, and the state-based rate filing system makes it too easy to divide and conquer. This is an industry ripe for disruption via total transparency.

Ididntdothis 7y ago
“This is an industry ripe for disruption via total transparency.” A lot of industries are ripe for this kind of disruption. With availability of more and more data there is a growing asymmetry between companies and consumers. Just yesterday I looked up something on Amazon. Sent the link to my girlfriend. She saw a price that was $10 more. Same often happens with flights. And in US healthcare the patient doesn’t even have the slightest idea what things will cost or what discount the insurance gets. To have functioning markets both sides need information but with all these algorithms the information gets very one sided.
- zamfi 7y ago
  > Just yesterday I looked up something on Amazon. Sent the link to my girlfriend. She saw a price that was $10 more. Out of curiosity, are you and your girlfriend in the same geographic market & served by the same amazon warehouse? And are you both prime members? I wonder if this is personalized to the individual or based on other factors.
  - Ididntdothis 7y ago
    We live in the same house. She has Prime , I don’t.
    - Mountain_Skies 7y ago
      Had the exact same experience back in December with an Echo Flex. I saw a good price, knew my roommate wanted one, so I went downstairs to let him know. His price was $10 higher even though he has Prime and I do not. Same address. The only difference I could think of was that he is a heavy user of multiple Echo devices while I own one that's in its box in a closet. He probably spends at least ten times as much annually with Amazon as I do.
      - Ididntdothis 7y ago
        I guess amazon views prime users as suckers who will pay more.
        perl4ever 7y ago
        ...for shipping. Free shipping costs $10. I wanted to order something the other day that should be in a local store, but wasn't, and random specialty websites had stuff for $20 plus shipping. So I found something equivalent on Amazon for $8, and when they pestered me about signing up for Prime to get free shipping, I did it and then set a calendar reminder for a week later to cancel it after I got my order. This sort of game could well make people working at Amazon feel justified in manipulating customers, but there doesn't seem to be any choice except to play the game everybody is. Random things on Amazon that I consider buying are often double or triple the price they should be, so I try to buy anywhere else if at all possible these days.
    - zamfi 7y ago
      Interesting. Maybe it showed you the lowest-cost vendor, and showed her the lowest-cost vendor with Prime shipping? And the difference was $10? Or was it shipped from and sold by the same place?
      - Ididntdothis 7y ago
        No idea. Shipping would have been for both of us.
        zamfi 7y ago
        Not sure what you mean — prime members get faster shipping on prime items, so maybe it showed her the vender with “prime” and that was $10 more expensive.
- CapmCrackaWaka 7y ago
  Companies have done this, and it doesn't work as well as you think. This is because a lot of protected classes and some other politically controversial demographics (poor people, old people, etc.) _cost more money to insure_. That is because they unequivocally do get into more accidents and have higher claim frequency. Creating total transparency into this process would be suicide for these companies - they absolutely do rate on zipcode, and poor neighborhoods absolutely have higher rates because of fraud, break ins, and generally higher claim rates. However, if you didn't rate on zipcode, then you are under-priced for these areas and you will be killed by adverse selection. TL;DR these companies have figured out how to obfuscate filings so people don't see them blatantly charging more for XYZ, and risk public outrage.
dboshardy 7y ago
Insurers have to publish how they calculate rates and premiums. Every method and justification has to be approved by state regulators before they even enact them. It's one of the most transparent industries already.
- Loughla 7y ago
  I would argue that actuarial tables, equations, and formulas are not necessarily transparent for 95% of the population.
  - runako 7y ago
    This is an astute summary of the practical effect of transparency in consumer-facing markets. The information is there, therefore it is transparent. It's sort of on you if you are unwilling take it as a second job and/or hire a suite of professionals to help you understand.
    - lotsofpulp 7y ago
      That's not the practical effect of transparency. It's the practical effect of living in a complicated world that must be modeled with math that most people don't know. It is on the populace to learn the math (many resources are available online), or fund people who can evaluate it on their behalf.
  - lotsofpulp 7y ago
    That is just changing the definition of transparency. Transparency means the information is readily available. The math isn't there to obfuscate the information, it is the information.
    - kccqzy 7y ago
      All of the laws passed by Congress as well as case laws arising from court proceedings are public. By your definition, our legal system is also very transparent. But that doesn't mean you don't need a lawyer just to navigate this voluminous corpus of information.
samsonasu 7y ago
I dont think average folks care about transparency, they mostly care about the bottom line. I would bet that if you offered a black-box $50/month with no explanation and a transparent, easily understood $60/month people would choose the cheaper option 9 times out of 9.
- Ididntdothis 7y ago
  The problem is that without transparency you can easily be manipulated into thinking that you are getting a good deal. Maybe in your example everybody else is getting a $30 deal but you will never know.
- solarkraft 7y ago
  I am pretty young and have never bought any insurance, but am currently shopping for some. Since I hear relatively many "insurer didn't pay" stories (often because of a weird detail), I don't have much trust in insurance and do place a lot of value on actually understanding what will be covered. I'm still a fan of a good deal, but confidence in reliability is a pretty important part of the features, no?
  - astura 7y ago
    I always read my insurance policies to see what's covered, to be honest insurance policies are very readable and fairly easy for the lay person to understand.
Spooky23 7y ago
The only reason we know about this is because its a regulated market, the regulator rejected the changes, and the data is available as a public filing. The state based system allows for a diversity in regulatory regime that wouldn't happen at the federal level.
thedance 7y ago
The only problem with total transparency is the American public is not ready to face its own driving record. A really large fraction of drivers _should_ _be_ uninsurable, including the 20% of American adults with a history of DUIs, anyone over 70, etc.

Ididntdothis 7y ago

“This is an industry ripe for disruption via total transparency.” A lot of industries are ripe for this kind of disruption. With availability of more and more data there is a growing asymmetry between companies and consumers. Just yesterday I looked up something on Amazon. Sent the link to my girlfriend. She saw a price that was $10 more. Same often happens with flights. And in US healthcare the patient doesn’t even have the slightest idea what things will cost or what discount the insurance gets. To have functioning markets both sides need information but with all these algorithms the information gets very one sided.

zamfi 7y ago
> Just yesterday I looked up something on Amazon. Sent the link to my girlfriend. She saw a price that was $10 more. Out of curiosity, are you and your girlfriend in the same geographic market & served by the same amazon warehouse? And are you both prime members? I wonder if this is personalized to the individual or based on other factors.
- Ididntdothis 7y ago
  We live in the same house. She has Prime , I don’t.
  - Mountain_Skies 7y ago
    Had the exact same experience back in December with an Echo Flex. I saw a good price, knew my roommate wanted one, so I went downstairs to let him know. His price was $10 higher even though he has Prime and I do not. Same address. The only difference I could think of was that he is a heavy user of multiple Echo devices while I own one that's in its box in a closet. He probably spends at least ten times as much annually with Amazon as I do.
    - Ididntdothis 7y ago
      I guess amazon views prime users as suckers who will pay more.
      - perl4ever 7y ago
        ...for shipping. Free shipping costs $10. I wanted to order something the other day that should be in a local store, but wasn't, and random specialty websites had stuff for $20 plus shipping. So I found something equivalent on Amazon for $8, and when they pestered me about signing up for Prime to get free shipping, I did it and then set a calendar reminder for a week later to cancel it after I got my order. This sort of game could well make people working at Amazon feel justified in manipulating customers, but there doesn't seem to be any choice except to play the game everybody is. Random things on Amazon that I consider buying are often double or triple the price they should be, so I try to buy anywhere else if at all possible these days.
  - zamfi 7y ago
    Interesting. Maybe it showed you the lowest-cost vendor, and showed her the lowest-cost vendor with Prime shipping? And the difference was $10? Or was it shipped from and sold by the same place?
    - Ididntdothis 7y ago
      No idea. Shipping would have been for both of us.
      - zamfi 7y ago
        Not sure what you mean — prime members get faster shipping on prime items, so maybe it showed her the vender with “prime” and that was $10 more expensive.
CapmCrackaWaka 7y ago
Companies have done this, and it doesn't work as well as you think. This is because a lot of protected classes and some other politically controversial demographics (poor people, old people, etc.) _cost more money to insure_. That is because they unequivocally do get into more accidents and have higher claim frequency. Creating total transparency into this process would be suicide for these companies - they absolutely do rate on zipcode, and poor neighborhoods absolutely have higher rates because of fraud, break ins, and generally higher claim rates. However, if you didn't rate on zipcode, then you are under-priced for these areas and you will be killed by adverse selection. TL;DR these companies have figured out how to obfuscate filings so people don't see them blatantly charging more for XYZ, and risk public outrage.

dboshardy 7y ago

Insurers have to publish how they calculate rates and premiums. Every method and justification has to be approved by state regulators before they even enact them. It's one of the most transparent industries already.

Loughla 7y ago
I would argue that actuarial tables, equations, and formulas are not necessarily transparent for 95% of the population.
- runako 7y ago
  This is an astute summary of the practical effect of transparency in consumer-facing markets. The information is there, therefore it is transparent. It's sort of on you if you are unwilling take it as a second job and/or hire a suite of professionals to help you understand.
  - lotsofpulp 7y ago
    That's not the practical effect of transparency. It's the practical effect of living in a complicated world that must be modeled with math that most people don't know. It is on the populace to learn the math (many resources are available online), or fund people who can evaluate it on their behalf.
- lotsofpulp 7y ago
  That is just changing the definition of transparency. Transparency means the information is readily available. The math isn't there to obfuscate the information, it is the information.
  - kccqzy 7y ago
    All of the laws passed by Congress as well as case laws arising from court proceedings are public. By your definition, our legal system is also very transparent. But that doesn't mean you don't need a lawyer just to navigate this voluminous corpus of information.

samsonasu 7y ago

I dont think average folks care about transparency, they mostly care about the bottom line. I would bet that if you offered a black-box $50/month with no explanation and a transparent, easily understood $60/month people would choose the cheaper option 9 times out of 9.

Ididntdothis 7y ago
The problem is that without transparency you can easily be manipulated into thinking that you are getting a good deal. Maybe in your example everybody else is getting a $30 deal but you will never know.
solarkraft 7y ago
I am pretty young and have never bought any insurance, but am currently shopping for some. Since I hear relatively many "insurer didn't pay" stories (often because of a weird detail), I don't have much trust in insurance and do place a lot of value on actually understanding what will be covered. I'm still a fan of a good deal, but confidence in reliability is a pretty important part of the features, no?
- astura 7y ago
  I always read my insurance policies to see what's covered, to be honest insurance policies are very readable and fairly easy for the lay person to understand.

Spooky23 7y ago

The only reason we know about this is because its a regulated market, the regulator rejected the changes, and the data is available as a public filing. The state based system allows for a diversity in regulatory regime that wouldn't happen at the federal level.

thedance 7y ago

The only problem with total transparency is the American public is not ready to face its own driving record. A really large fraction of drivers _should_ _be_ uninsurable, including the 20% of American adults with a history of DUIs, anyone over 70, etc.