6 ms·

Surprised to see something insurance-related on the front page of HN; very nice! I’m building something in this space, so let me throw in three more data points

by numair 5y ago

Surprised to see something insurance-related on the front page of HN; very nice! I’m building something in this space, so let me throw in three more data points: - More than 90% of insurers in one recent industry survey stated that “exclusions or limitations” are a “methodology for recovery.” Translation: that means they’re expecting not to pay you. - The Chief Risk Officer of a super-large multinational recently commented that his team realized that they weren’t adequately accounting for the true cost of their insurance policies, as they weren’t including the cost of suing their insurance providers to make sure they actually paid. - Eliot Spitzer went after the insurance companies in 2005 for “contingent commissions,” which were basically a gray-area form of kickbacks buyers didn’t know they were paying. People paid fines, practices became illegal... Until 2010, when contingent commission became legal again. There is a lot more I can say about the incredible percentage of your policy that goes into marketing/admin/etc rather than, you know, insuring risk, and so on... If you’re interested in working on something big and meaningful to help protect billions of under- and non-insured people against catastrophic risk, send me an email: numair@numair.com

genedan 5y ago
> incredible percentage of your policy that goes into marketing/admin/etc The expense ratio is something like 30 to 40 percent of premium on commercial policies in case anyone was wondering. This figure is found on annual reports. I'm not sure if insurers should be blamed for that though. Economically, that can be explained by the concave shape of consumers' Von Neumann Morgenstern utility curves describing their degree of risk aversion. It reflects their willingness to pay for a trading an uncertain outcome to a certain one.
- state_less 5y ago
  I think prompting people with removing risk at the checkout counter might result in a different appetite for risk aversion than if they came to the decision on their own over a period of time. So maybe folks are being corralled into a losing bet?
- marcosdumay 5y ago
  Hum... Competition should make insurance prices independent of the consumers preferences for risk, just like it makes any other good's price independent of their value to consumers. If insurance prices change with people's preferences, that's a strong signal the market doesn't have enough competition.
  - nwienert 5y ago
    It just strikes me as an intensely bad equilibrium where the best priced insurance should be the one that advertises least, yet insurance is the most heavily advertised industry. It makes sense why, it’s basically entirely 0 sum. There’s no innovation to be made, just stealing customers from other companies. Further, I don’t see how competition is improving the industry, as they have next to no tech. I see that competition may keep things honest, but especially in the cases like health insurance I can’t see how it has. Whether that’s entirely caused by bad policy I don’t know. For all the above, in my dim understanding, it seems like one of the few truly ideal cases for being government run. I’d love to hear reasons why not.
    - clairity 5y ago
      you can compete on price, or you can compete on quality. price competition can take various forms, from operational efficiency (better actuarial science, more efficient claims, etc.) to marketing efficiency (better targeting, simpler product, etc.). quality competition would encompass more sophisticated products/product lines, better customer service, etc. so there is a lot of room for competition to drive down price (and increase quality) without it being a zero-sum game. the problem is that markets for financial products are irresistable to the greedy (as it's stripped down to the bare essence of pursuing money itself) making ethically dubious decisions under greedy incentive structures. the government can create a more competitive market through regulation and enforcement but chooses not to (because of its own perverse incentives), so it's not a given that a government monopoly would necessarily be any better. with most issues like this, the default option should be to do both: have government-run options (with no unfair advantages) in competition with (for-profit and non-profit) market participants. this is a pretty rare configuration however, since it removes the obvious (unfair) leverage points for taking advantage of a market.
WastingMyTime89 5y ago
> More than 90% of insurers in one recent industry survey stated that “exclusions or limitations” are a “methodology for recovery.” Translation: that means they’re expecting not to pay you. To add an anecdote to this, I have a friend who used to work for an insurer and now works in reinsurance and regularly jokes that everytime an insurer pays somethings, someone is getting fired. This is ihmo one of if not the most dishonest field of work in the modern world.
- 74d-fe6-2c6 5y ago
  really? I mean - from my anecdotal experience and observations, I'd conclude, that an insurer refusing payment without an understandable reason is still very rare. To some extent, you get what you pay for, also.
  - sjg007 5y ago
    It is quite common to be paid less than whole.
- zerni 5y ago
  The root of this problem is the conflict of interest in insurance. You lose money when settling claims. There are some companies addressing this problem for consumers. Look at Lemonade.com, they do not benefit from not paying out as their margin is fixed or Laka.co makes money when claims are paid. (Disclaimer: I work for Laka)
  - thatguy0900 5y ago
    Wouldn't the root of the problem be how much insurance is mandatory? If it wasn't then people just wouldn't buy it if they never actually paid out
    - jopsen 5y ago
      How many times have your house burned down? Events worth insuring against are so rare that you can't use experience from the last time to pick a better insurance company. Hence, why the market is regulated. Actually, I think my both renters and auto insurance contains a legal assistance insurance component, which is probably useful if I need to sue the insurance company :) (I'm not sure it's as large as it ought to be, but the idea is nice)
Abishek_Muthian 5y ago
Hi thanks for doing what ever you're doing to help under- and non-insured people. I'm disabled, Achondroplasia. Insurers in my country have constantly denied me health insurance. I have documented at length my ordeal with top health insurers in the country, Who are in partnership with leading international insurers[1]. Now there is 100% FDI for the insurance industry. I've appealed to the regulatory body with each instance, But they always side with the insurance company as the former close my requests under totally different pretext (never mentioning that they denied me a policy) e.g. My complaint is that insurer not providing me the policy, Insurer responds to my complaint as 'Your refund will be processed in 10 days' and my regulatory body closes my complaint as 'Insurer has responded'. This in-spite of clear supreme court verdicts in similar previous cases asking the insurance regulator to ensure disabled are not denied policies. [1] https://abishekmuthian.com/insurers-are-putting-the-lives-of-sick-and-disabled-at-risk-during-covid-19-pandemic/ https://abishekmuthian.com/insurers-are-putting-the-lives-of... P.S. I will update some latest developments to the blog tomorrow where a insurer asked me to lie about my disability to get the policy.
- plafl 5y ago
  This is why public health insurance is so important and why I feel so lucky to be covered by one: my brother had brain hypoxia during birth and even in a country (Spain) with a solid public system it places considerable personal and financial strain on our family. I don't know about your legal system but in Spain at least it must be proved by the insurer that if you lie about a previous condition that lie is directly related to the payment they are trying to deny you.
  - smnrchrds 5y ago
    That's a nice law. In Canada, most aspects of medical insurance are single payer, but other aspects (like out-of-country travel medical insurance) give too much latitude to the insurance companies. If you make any false statement when applying for insurance, when you try to use your insurance, the company will refuse your claim and declares the policy null and void. For example, theoretically, if you don't disclose even the smallest details (e.g. that you had a chest x-ray done 10 years ago that did not show any abnormality), and then you get something completely unrelated, like getting stabbed during your travel and have to go to the hospital, the insurance company can and will refuse to pay out. It's ridiculous. https://www.cbc.ca/news/canada/british-columbia/retired-couple-billed-50-000-despite-travel-insurance-1.1056603 https://www.cbc.ca/news/canada/british-columbia/retired-coup... https://www.cbc.ca/news/canada/british-columbia/hefty-medical-bills-rejected-by-travel-insurance-firms-1.1407701 https://www.cbc.ca/news/canada/british-columbia/hefty-medica...
jcrben 5y ago
What are you building for insurance? I used to be an insurance regulator, still find the space pretty interesting

by numair 5y ago

genedan 5y ago

> incredible percentage of your policy that goes into marketing/admin/etc The expense ratio is something like 30 to 40 percent of premium on commercial policies in case anyone was wondering. This figure is found on annual reports. I'm not sure if insurers should be blamed for that though. Economically, that can be explained by the concave shape of consumers' Von Neumann Morgenstern utility curves describing their degree of risk aversion. It reflects their willingness to pay for a trading an uncertain outcome to a certain one.

state_less 5y ago
I think prompting people with removing risk at the checkout counter might result in a different appetite for risk aversion than if they came to the decision on their own over a period of time. So maybe folks are being corralled into a losing bet?
marcosdumay 5y ago
Hum... Competition should make insurance prices independent of the consumers preferences for risk, just like it makes any other good's price independent of their value to consumers. If insurance prices change with people's preferences, that's a strong signal the market doesn't have enough competition.
- nwienert 5y ago
  It just strikes me as an intensely bad equilibrium where the best priced insurance should be the one that advertises least, yet insurance is the most heavily advertised industry. It makes sense why, it’s basically entirely 0 sum. There’s no innovation to be made, just stealing customers from other companies. Further, I don’t see how competition is improving the industry, as they have next to no tech. I see that competition may keep things honest, but especially in the cases like health insurance I can’t see how it has. Whether that’s entirely caused by bad policy I don’t know. For all the above, in my dim understanding, it seems like one of the few truly ideal cases for being government run. I’d love to hear reasons why not.
  - clairity 5y ago
    you can compete on price, or you can compete on quality. price competition can take various forms, from operational efficiency (better actuarial science, more efficient claims, etc.) to marketing efficiency (better targeting, simpler product, etc.). quality competition would encompass more sophisticated products/product lines, better customer service, etc. so there is a lot of room for competition to drive down price (and increase quality) without it being a zero-sum game. the problem is that markets for financial products are irresistable to the greedy (as it's stripped down to the bare essence of pursuing money itself) making ethically dubious decisions under greedy incentive structures. the government can create a more competitive market through regulation and enforcement but chooses not to (because of its own perverse incentives), so it's not a given that a government monopoly would necessarily be any better. with most issues like this, the default option should be to do both: have government-run options (with no unfair advantages) in competition with (for-profit and non-profit) market participants. this is a pretty rare configuration however, since it removes the obvious (unfair) leverage points for taking advantage of a market.

WastingMyTime89 5y ago

> More than 90% of insurers in one recent industry survey stated that “exclusions or limitations” are a “methodology for recovery.” Translation: that means they’re expecting not to pay you. To add an anecdote to this, I have a friend who used to work for an insurer and now works in reinsurance and regularly jokes that everytime an insurer pays somethings, someone is getting fired. This is ihmo one of if not the most dishonest field of work in the modern world.

74d-fe6-2c6 5y ago
really? I mean - from my anecdotal experience and observations, I'd conclude, that an insurer refusing payment without an understandable reason is still very rare. To some extent, you get what you pay for, also.
- sjg007 5y ago
  It is quite common to be paid less than whole.
zerni 5y ago
The root of this problem is the conflict of interest in insurance. You lose money when settling claims. There are some companies addressing this problem for consumers. Look at Lemonade.com, they do not benefit from not paying out as their margin is fixed or Laka.co makes money when claims are paid. (Disclaimer: I work for Laka)
- thatguy0900 5y ago
  Wouldn't the root of the problem be how much insurance is mandatory? If it wasn't then people just wouldn't buy it if they never actually paid out
  - jopsen 5y ago
    How many times have your house burned down? Events worth insuring against are so rare that you can't use experience from the last time to pick a better insurance company. Hence, why the market is regulated. Actually, I think my both renters and auto insurance contains a legal assistance insurance component, which is probably useful if I need to sue the insurance company :) (I'm not sure it's as large as it ought to be, but the idea is nice)

Abishek_Muthian 5y ago

Hi thanks for doing what ever you're doing to help under- and non-insured people. I'm disabled, Achondroplasia. Insurers in my country have constantly denied me health insurance. I have documented at length my ordeal with top health insurers in the country, Who are in partnership with leading international insurers[1]. Now there is 100% FDI for the insurance industry. I've appealed to the regulatory body with each instance, But they always side with the insurance company as the former close my requests under totally different pretext (never mentioning that they denied me a policy) e.g. My complaint is that insurer not providing me the policy, Insurer responds to my complaint as 'Your refund will be processed in 10 days' and my regulatory body closes my complaint as 'Insurer has responded'. This in-spite of clear supreme court verdicts in similar previous cases asking the insurance regulator to ensure disabled are not denied policies. [1] https://abishekmuthian.com/insurers-are-putting-the-lives-of-sick-and-disabled-at-risk-during-covid-19-pandemic/ https://abishekmuthian.com/insurers-are-putting-the-lives-of... P.S. I will update some latest developments to the blog tomorrow where a insurer asked me to lie about my disability to get the policy.

plafl 5y ago
This is why public health insurance is so important and why I feel so lucky to be covered by one: my brother had brain hypoxia during birth and even in a country (Spain) with a solid public system it places considerable personal and financial strain on our family. I don't know about your legal system but in Spain at least it must be proved by the insurer that if you lie about a previous condition that lie is directly related to the payment they are trying to deny you.
- smnrchrds 5y ago
  That's a nice law. In Canada, most aspects of medical insurance are single payer, but other aspects (like out-of-country travel medical insurance) give too much latitude to the insurance companies. If you make any false statement when applying for insurance, when you try to use your insurance, the company will refuse your claim and declares the policy null and void. For example, theoretically, if you don't disclose even the smallest details (e.g. that you had a chest x-ray done 10 years ago that did not show any abnormality), and then you get something completely unrelated, like getting stabbed during your travel and have to go to the hospital, the insurance company can and will refuse to pay out. It's ridiculous. https://www.cbc.ca/news/canada/british-columbia/retired-couple-billed-50-000-despite-travel-insurance-1.1056603 https://www.cbc.ca/news/canada/british-columbia/retired-coup... https://www.cbc.ca/news/canada/british-columbia/hefty-medical-bills-rejected-by-travel-insurance-firms-1.1407701 https://www.cbc.ca/news/canada/british-columbia/hefty-medica...

jcrben 5y ago

What are you building for insurance? I used to be an insurance regulator, still find the space pretty interesting