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While corruption may have been the source of this particular business, the fact that insurance is required by law is a good thing. The counterfactual involves a

While corruption may have been the source of this particular business, the fact that insurance is required by law is a good thing. The counterfactual involves a bunch of uninsured judgement proof drivers clogging the road and ruining everyone else's day/life. The problem is already bad enough now when it is illegal to do.

romwell 5y ago
Hot take: if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees. Otherwise, it's just an income-generating scheme for private parties. Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court. They don't have to follow that the police report says regarding whose fault it is. How do I know? Got told that after getting into an accident on a road trip. So much for a good thing.
- wbl 5y ago
  Depends on the state. Some have no fault allocation systems to avoid these lawsuits.
- fn-mote 5y ago
  > it should be provided by the state and paid for with taxes / annual registration fees The free market is required to accurately price the risk for each driver. A 45 year old female driver with no infractions is much less risk than an 18 year old male with a DUI, so the former should pay less in premiums. The current system is doing that. I do not see how a state-provided solution would come up with "accurate" pricing for individuals. Some market is needed. I could see how some people (especially in high risk groups) would prefer not to pay according to their risk, but I do not agree that is better for society.
  - toomuchtodo 5y ago
    A government entity could perform this, no free market required. See residential flood insurance for a government based risk rating example.
    - asdfasgasdgasdg 5y ago
      IIUC, that is actually a form of government subsidy, which exists only because there are places that are uninsurable due to flood risk. It is politically unpopular to tell people they have to self-insure because they picked a risky to live. If we decided that were something we were willing to tell people, there'd be no issue with letting the market handle it, same as most insurances.
    - seoaeu 5y ago
      You mean the same policy that resulted in a whole bunch of people living in flood zones? And which we can't get them to leave because it would be politically unpopular to raise their insurance premiums to reflect their actual risk? That seems more like an example of exactly why we don't want the government -- which inevitably means politicians -- setting insurance rates.
    - nradov 5y ago
      Government provided residential flood insurance is a horrible example of moral hazard and should be eliminated. Taxpayers shouldn't have to subsidize investors who choose to purchase property in flood zones.
  - bobsmooth 5y ago
    >The free market is required to accurately price the risk for each driver. That same market means some will decide that not having insurance is a better deal. Tying insurance to something like drivers licences increases the cost of not having insurance. >I do not see how a state-provided solution would come up with "accurate" pricing for individuals. Can the state not hire actuaries?
    - gruez 5y ago
      >Can the state not hire actuaries? yes, but a sibling commenter has weighed in how it turns out: https://news.ycombinator.com/item?id=29719762 https://news.ycombinator.com/item?id=29719762
  - jjnoakes 5y ago
    A counterpoint (not necessarily my view but a view nonetheless) would be that if everyone pays into a single required insurance pool then the risk doesn't need to be accurately determined a priori. Each individual's rates might be the same, but they could be lower overall because there are more paying in. A low risk driver may pay more than they use, but it could be less than the market rate regardless.
    - refurb 5y ago
      The risk still needs to be accurately determined, even if not for each individual. If 100 people in a population will be injured and get a pay out of $100k, you need to know that to set general rates. What I’ve seen in places that have government insurance is the government is constantly trying to backstop the insurance. Why? It becomes a political hot potato when rates go up, so there is pressure to keep them down with lower premiums. The insurance body doesn’t care because the government will bail them out.
      - jjnoakes 5y ago
        You can just update rates after the fact if necessary. I don't really see the problem with that. People with a bad history may get higher rates, just not based on risk analysis but based on their actual history.
        whatshisface 5y ago
        The only way to convert "has a DUI" into a specific rate increase is through risk analysis of everybody with DUIs.
        jjnoakes 5y ago
        Why is that the only way? Seems to me you could just raise rates after someone caused actual damage instead.
        5y ago
- gruez 5y ago
  >Hot take: if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees. >Otherwise, it's just an income-generating scheme for private parties. Food and shelter are essentially "required" for everyone. Should those be provided by the state, to avoid it being "an income-generating scheme for private parties"?
  - whatshisface 5y ago
    If they said "yes" to that they wouldn't be the first in history with that answer.
    - gruez 5y ago
      And we all know how well that worked out.
      - romwell 5y ago
        You mean, it turned a backwater decaying agrarian empire into a world superpower, twice (Russia and China)? Side note: when the USSR held a referendum on whether it should be dissolved, most people voted to keep it (77% yes, 23% no) [1]. Things by far were not rosy in the late 80s (when a quarter of the nation votes for dissolution, things aren't great), but they weren't 30s either. That's, of course assuming you mean the USSR/China and ignore all the other welfare states in Europe, as well as programs like foodstamps in the US. [1] https://en.wikipedia.org/wiki/1991_Soviet_Union_referendum https://en.wikipedia.org/wiki/1991_Soviet_Union_referendum
  - romwell 5y ago
    >Food and shelter are essentially "required" for everyone. Should those be provided by the state, to avoid it being "an income-generating scheme for private parties"? The answer is: yes, absolutely, and we essentially do that to some extent with food stamps and homeless shelters; but, of course, not nearly to the extend that we can and should. Shelter isn't just "required" in scare quotes, though; it's illegal to be homeless (you can get charged with loitering, trespassing, etc. if you try living pretty much anywhere where you're not paying for it some way). We all know that the rental market is a scam, since mortgage payments (i.e. what you pay to own the property, plus profit for the bank) is lower than the rent in most markets (sometimes even after adding property taxes on top). We also know how zoning restrictions on construction of residential properties and high-rises artificially restricts the supply of housing precisely where it's needed: i.e. where the jobs are (Example #1: San Francisco Bay Area). So yes, the housing market here is an incoming-generating scheme for landlords. To the extent that people joke that Silicon Valley is a machine to transfer money from venture capitalists to landlords through engineers' pockets. Note that I am not saying that the state should be the only supplier of shelter, food, healthcare, transportation, and education. Just that it should be one of the players on the free market, with a cost of 0 (or barely above nominal). That's how Europe does healthcare and education, and at the very least it shows that we can afford this on a grand scale.
- asdfasgasdgasdg 5y ago
  The problem with that idea is moral hazard. It's better for people to be incented financially to drive safely.
- TameAntelope 5y ago
  Insurance is one of those areas of knowledge where, unless you're an expert, you can easily be told true statements that are highly misleading. Overlap that with the law, and you get a fantastic tangle of misleading information that can cripple your ability to make good choices. It's probably true that, technically, liability insurance is only available once the driver loses in court, but that means very different things than it implies. For one, the driver has no knowledge of the court case, in many situations. The insurance companies work with one another to figure out who is paying what, and the insured is largely uninvolved. You can "be told" many things about a system you're unfamiliar with that sound, on their face, absurd, but upon inspection actually make plenty of sense. This sounds like one of those things.
  - sjg007 5y ago
    Another area like this is special education in public schools. Meaning the IDEA etc...
- mb7733 5y ago
  British Columbia forces you to buy liability insurance from the provincial government and it's awful. The premium calculations are illogical and inefficient. Bad drivers are subsidized by good ones, the rates are among the highest in the country and the govt manages to lose money on it. My experience in other provinces with private insurance companies was much better.
  - KennyBlanken 5y ago
    That's likely not because of government inefficiencies, but because a small segment of the population is responsible for the vast majority of costs. Mostly drunk drivers, to be frank - but also that certain lovely category of individual who feels that societal rules don't apply to them. Private insurers can say "fuck no, we're not insuring you, you've got 2 DUIs, 6 speeding tickets, and numerous equipment violations" or make the cost of that insurance absurdly expensive, pricing them out. If the government is providing the insurance, they likely have to say "yes" to everyone. Waiving the requirement to insure everyone is well and good until someone looks at the data and sees that your completely non-discriminatory rules are effectively discriminating against certain classes of people.
  - thaumasiotes 5y ago
    > The premium calculations are illogical and inefficient. Bad drivers are subsidized by good ones Good drivers subsidizing bad ones is the entire concept of an insurance pool. The corrective mechanism is that if a driver reveals themselves to be bad enough, you make them stop driving.
    - khuey 5y ago
      No, it's not. The premise of an insurance pool is that the lucky subsidize the unlucky. Differences in premiums are supposed to account for good vs bad.
      - thaumasiotes 5y ago
        > Differences in premiums are supposed to account for good vs bad. This would require a way to measure driving quality with perfect accuracy and no errors. I feel comfortable in my claim that (1) nobody can do this; (2) nobody claims to be able to do this; and (3) nobody believes that this might one day be possible. Differing premium rates just mean that you have several pools, each defined by their premium rate, in which the better drivers subsidize the worse ones.
- throw0101a 5y ago
  > Hot take: if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees. Which it is in some jurisdictions, e.g., BC, Quebec. In the jurisdictions where it is done by the private sector, it is generally heavily regulated. > Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court. This depends on the jurisdiction: in the province of Ontario, with is a "no fault" area, there are few(er) court cases: > Ontario has a "no-fault" car insurance system, but this does not mean that no one is at fault in an accident. The term "no-fault" insurance simply means if you are injured or your car is damaged in an accident, then you deal with your own insurance company, regardless of who is at fault. You don't have to go after the at-fault driver for compensation. * https://mitchellandabbott.com/no-fault-insurance.php https://mitchellandabbott.com/no-fault-insurance.php > Essentially, no-fault insurance in Ontario is that in the event of an accident (without or without collision coverage), all drivers involved will process individual claims through their own insurance companies to get coverage for damages and injuries. It’s a system that has prioritized the claims process for drivers who need reimbursement so that the drivers aren’t kept waiting. * https://www.ahainsurance.ca/car-insurance/no-fault-insurance-ontario/ https://www.ahainsurance.ca/car-insurance/no-fault-insurance... * https://en.wikipedia.org/wiki/No-fault_insurance https://en.wikipedia.org/wiki/No-fault_insurance There's even a specific regulation called "Fault Determination Rules" that covers the most common cases: * https://www.ontario.ca/laws/regulation/900668 https://www.ontario.ca/laws/regulation/900668 There are pros and cons for both public/government versus private insurance, and 'fault' versus no-fault insurance, regimes.
- dragonwriter 5y ago
  > if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees. It's not, even in theory, in most places, though. It's just a convenient option to a liability bond that most drivers choose. > Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court. They don't have to follow that the police report says regarding whose fault it is. Well, yeah. It's liability insurance. It has to pay when a legal liability is established against the driver. That is, exactly when the driver would have to pay in the absence of insurance. Determining legal liability is what we have courts for, not police. The cops doing the courts’ jobs is a phenomenally bad idea.

romwell 5y ago

Hot take: if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees. Otherwise, it's just an income-generating scheme for private parties. Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court. They don't have to follow that the police report says regarding whose fault it is. How do I know? Got told that after getting into an accident on a road trip. So much for a good thing.

wbl 5y ago
Depends on the state. Some have no fault allocation systems to avoid these lawsuits.
fn-mote 5y ago
> it should be provided by the state and paid for with taxes / annual registration fees The free market is required to accurately price the risk for each driver. A 45 year old female driver with no infractions is much less risk than an 18 year old male with a DUI, so the former should pay less in premiums. The current system is doing that. I do not see how a state-provided solution would come up with "accurate" pricing for individuals. Some market is needed. I could see how some people (especially in high risk groups) would prefer not to pay according to their risk, but I do not agree that is better for society.
- toomuchtodo 5y ago
  A government entity could perform this, no free market required. See residential flood insurance for a government based risk rating example.
  - asdfasgasdgasdg 5y ago
    IIUC, that is actually a form of government subsidy, which exists only because there are places that are uninsurable due to flood risk. It is politically unpopular to tell people they have to self-insure because they picked a risky to live. If we decided that were something we were willing to tell people, there'd be no issue with letting the market handle it, same as most insurances.
  - seoaeu 5y ago
    You mean the same policy that resulted in a whole bunch of people living in flood zones? And which we can't get them to leave because it would be politically unpopular to raise their insurance premiums to reflect their actual risk? That seems more like an example of exactly why we don't want the government -- which inevitably means politicians -- setting insurance rates.
  - nradov 5y ago
    Government provided residential flood insurance is a horrible example of moral hazard and should be eliminated. Taxpayers shouldn't have to subsidize investors who choose to purchase property in flood zones.
- bobsmooth 5y ago
  >The free market is required to accurately price the risk for each driver. That same market means some will decide that not having insurance is a better deal. Tying insurance to something like drivers licences increases the cost of not having insurance. >I do not see how a state-provided solution would come up with "accurate" pricing for individuals. Can the state not hire actuaries?
  - gruez 5y ago
    >Can the state not hire actuaries? yes, but a sibling commenter has weighed in how it turns out: https://news.ycombinator.com/item?id=29719762 https://news.ycombinator.com/item?id=29719762
- jjnoakes 5y ago
  A counterpoint (not necessarily my view but a view nonetheless) would be that if everyone pays into a single required insurance pool then the risk doesn't need to be accurately determined a priori. Each individual's rates might be the same, but they could be lower overall because there are more paying in. A low risk driver may pay more than they use, but it could be less than the market rate regardless.
  - refurb 5y ago
    The risk still needs to be accurately determined, even if not for each individual. If 100 people in a population will be injured and get a pay out of $100k, you need to know that to set general rates. What I’ve seen in places that have government insurance is the government is constantly trying to backstop the insurance. Why? It becomes a political hot potato when rates go up, so there is pressure to keep them down with lower premiums. The insurance body doesn’t care because the government will bail them out.
    - jjnoakes 5y ago
      You can just update rates after the fact if necessary. I don't really see the problem with that. People with a bad history may get higher rates, just not based on risk analysis but based on their actual history.
      - whatshisface 5y ago
        The only way to convert "has a DUI" into a specific rate increase is through risk analysis of everybody with DUIs.
        jjnoakes 5y ago
        Why is that the only way? Seems to me you could just raise rates after someone caused actual damage instead.
        5y ago
gruez 5y ago
>Hot take: if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees. >Otherwise, it's just an income-generating scheme for private parties. Food and shelter are essentially "required" for everyone. Should those be provided by the state, to avoid it being "an income-generating scheme for private parties"?
- whatshisface 5y ago
  If they said "yes" to that they wouldn't be the first in history with that answer.
  - gruez 5y ago
    And we all know how well that worked out.
    - romwell 5y ago
      You mean, it turned a backwater decaying agrarian empire into a world superpower, twice (Russia and China)? Side note: when the USSR held a referendum on whether it should be dissolved, most people voted to keep it (77% yes, 23% no) [1]. Things by far were not rosy in the late 80s (when a quarter of the nation votes for dissolution, things aren't great), but they weren't 30s either. That's, of course assuming you mean the USSR/China and ignore all the other welfare states in Europe, as well as programs like foodstamps in the US. [1] https://en.wikipedia.org/wiki/1991_Soviet_Union_referendum https://en.wikipedia.org/wiki/1991_Soviet_Union_referendum
- romwell 5y ago
  >Food and shelter are essentially "required" for everyone. Should those be provided by the state, to avoid it being "an income-generating scheme for private parties"? The answer is: yes, absolutely, and we essentially do that to some extent with food stamps and homeless shelters; but, of course, not nearly to the extend that we can and should. Shelter isn't just "required" in scare quotes, though; it's illegal to be homeless (you can get charged with loitering, trespassing, etc. if you try living pretty much anywhere where you're not paying for it some way). We all know that the rental market is a scam, since mortgage payments (i.e. what you pay to own the property, plus profit for the bank) is lower than the rent in most markets (sometimes even after adding property taxes on top). We also know how zoning restrictions on construction of residential properties and high-rises artificially restricts the supply of housing precisely where it's needed: i.e. where the jobs are (Example #1: San Francisco Bay Area). So yes, the housing market here is an incoming-generating scheme for landlords. To the extent that people joke that Silicon Valley is a machine to transfer money from venture capitalists to landlords through engineers' pockets. Note that I am not saying that the state should be the only supplier of shelter, food, healthcare, transportation, and education. Just that it should be one of the players on the free market, with a cost of 0 (or barely above nominal). That's how Europe does healthcare and education, and at the very least it shows that we can afford this on a grand scale.
asdfasgasdgasdg 5y ago
The problem with that idea is moral hazard. It's better for people to be incented financially to drive safely.
TameAntelope 5y ago
Insurance is one of those areas of knowledge where, unless you're an expert, you can easily be told true statements that are highly misleading. Overlap that with the law, and you get a fantastic tangle of misleading information that can cripple your ability to make good choices. It's probably true that, technically, liability insurance is only available once the driver loses in court, but that means very different things than it implies. For one, the driver has no knowledge of the court case, in many situations. The insurance companies work with one another to figure out who is paying what, and the insured is largely uninvolved. You can "be told" many things about a system you're unfamiliar with that sound, on their face, absurd, but upon inspection actually make plenty of sense. This sounds like one of those things.
- sjg007 5y ago
  Another area like this is special education in public schools. Meaning the IDEA etc...
mb7733 5y ago
British Columbia forces you to buy liability insurance from the provincial government and it's awful. The premium calculations are illogical and inefficient. Bad drivers are subsidized by good ones, the rates are among the highest in the country and the govt manages to lose money on it. My experience in other provinces with private insurance companies was much better.
- KennyBlanken 5y ago
  That's likely not because of government inefficiencies, but because a small segment of the population is responsible for the vast majority of costs. Mostly drunk drivers, to be frank - but also that certain lovely category of individual who feels that societal rules don't apply to them. Private insurers can say "fuck no, we're not insuring you, you've got 2 DUIs, 6 speeding tickets, and numerous equipment violations" or make the cost of that insurance absurdly expensive, pricing them out. If the government is providing the insurance, they likely have to say "yes" to everyone. Waiving the requirement to insure everyone is well and good until someone looks at the data and sees that your completely non-discriminatory rules are effectively discriminating against certain classes of people.
- thaumasiotes 5y ago
  > The premium calculations are illogical and inefficient. Bad drivers are subsidized by good ones Good drivers subsidizing bad ones is the entire concept of an insurance pool. The corrective mechanism is that if a driver reveals themselves to be bad enough, you make them stop driving.
  - khuey 5y ago
    No, it's not. The premise of an insurance pool is that the lucky subsidize the unlucky. Differences in premiums are supposed to account for good vs bad.
    - thaumasiotes 5y ago
      > Differences in premiums are supposed to account for good vs bad. This would require a way to measure driving quality with perfect accuracy and no errors. I feel comfortable in my claim that (1) nobody can do this; (2) nobody claims to be able to do this; and (3) nobody believes that this might one day be possible. Differing premium rates just mean that you have several pools, each defined by their premium rate, in which the better drivers subsidize the worse ones.
throw0101a 5y ago
> Hot take: if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees. Which it is in some jurisdictions, e.g., BC, Quebec. In the jurisdictions where it is done by the private sector, it is generally heavily regulated. > Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court. This depends on the jurisdiction: in the province of Ontario, with is a "no fault" area, there are few(er) court cases: > Ontario has a "no-fault" car insurance system, but this does not mean that no one is at fault in an accident. The term "no-fault" insurance simply means if you are injured or your car is damaged in an accident, then you deal with your own insurance company, regardless of who is at fault. You don't have to go after the at-fault driver for compensation. * https://mitchellandabbott.com/no-fault-insurance.php https://mitchellandabbott.com/no-fault-insurance.php > Essentially, no-fault insurance in Ontario is that in the event of an accident (without or without collision coverage), all drivers involved will process individual claims through their own insurance companies to get coverage for damages and injuries. It’s a system that has prioritized the claims process for drivers who need reimbursement so that the drivers aren’t kept waiting. * https://www.ahainsurance.ca/car-insurance/no-fault-insurance-ontario/ https://www.ahainsurance.ca/car-insurance/no-fault-insurance... * https://en.wikipedia.org/wiki/No-fault_insurance https://en.wikipedia.org/wiki/No-fault_insurance There's even a specific regulation called "Fault Determination Rules" that covers the most common cases: * https://www.ontario.ca/laws/regulation/900668 https://www.ontario.ca/laws/regulation/900668 There are pros and cons for both public/government versus private insurance, and 'fault' versus no-fault insurance, regimes.
dragonwriter 5y ago
> if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees. It's not, even in theory, in most places, though. It's just a convenient option to a liability bond that most drivers choose. > Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court. They don't have to follow that the police report says regarding whose fault it is. Well, yeah. It's liability insurance. It has to pay when a legal liability is established against the driver. That is, exactly when the driver would have to pay in the absence of insurance. Determining legal liability is what we have courts for, not police. The cops doing the courts’ jobs is a phenomenally bad idea.