9 ms·

> The cost to insure against a hole-in-one is dependent on 3 factors: > 1. The number of golfers in the tournament > 2. The length (yardage) of the contest ho

> The cost to insure against a hole-in-one is dependent on 3 factors: > 1. The number of golfers in the tournament > 2. The length (yardage) of the contest hole > 3. The cash value of the hole-in-one prize > Once a client provides this information, Gilmartin plugs it into an algorithm that computes the odds, factors in his risk and margins, and spits out a dollar amount per golfer. This seems like it could work as a simplified example of how all insurance pricing works, although with many, many more variables involved I'm sure. It'd be fascinating to look at the details of one of these algorithms.

MivLives 4y ago
I'd love to see the weird trends they find on some of the bigger more complex algorithms. Like people who drive red cars born July 2000 with a pet bird are 8 times more likely to get in an accident if they primarily drive near Chicago or Miami. I'm sure it's not that granular but I can dream.
- t_mann 4y ago
  People who drive red cars born July 2000 with a pet bird are 8 times more likely to get in an accident if they primarily drive near Chicago or Miami Hopefully they know their stats modelling well enough to know that's not an actual signal.
  - PeterisP 4y ago
    Ach, there may well there be signal in there (and the insurance companies do enough stats modelling to tell if there is) - I mean, isn't the car color a well known example where the people's tendency to drive recklessly is correlated with their choice of buying a boring color or a flashy one?
  - petercooper 4y ago
    One of the things that swings the price a fair bit in the UK is your job title which has always intrigued me as a signal. I could understand if it's someone using their car for deliveries or as a race car, but I'm unsure why a "counsellor" could be paying double the premiums of a "Web developer" on standard insurance.
    - ev1 4y ago
      I've been told by an agent before that a "web developer" at a contractor/wordpress body shop-type will be less likely to take risks, while a "web developer" at FB or G would be more likely to do things like rock climb, drive into the middle of nowhere, drive faster.
  - function_seven 4y ago
    Heh. “I think you're overfitting here, no?” “That may be, but as your insurance agent, I recommend getting rid of the bird to save money on your premiums.”
- nradov 4y ago
  Most state insurance commissions have strict rules that limit the factors which insurers are allowed to use for setting auto insurance premiums.
SamReidHughes 4y ago
Hole in one probability can vary by a large factor depending on hole location and green contour. If that's all they consider, either they're heavily profitable or some tournaments could break even.
- dgritsko 4y ago
  True. Approximate skill of the golfer could also be an important factor - the article even mentions three LPGA golfers getting holes-in-one in the same tournament. Presumably they were quite a bit more talented than your average entrant.
  - pjlegato 4y ago
    The article mentions in passing that pro golfers are usually excluded from the standard / cheaper insurance policies.
- supernewton 4y ago
  From the article, a 100 golfer tournament with a hole in one prize of $7500 costs $187 in premiums. If the hole in one probability of each golfer is 1/12500, the expected payout is only $7500/12500*100=$60, so I'm going with "hugely profitable".
  - eru 4y ago
    I'd go with: the actual actuarial cost of the hole-in-one payout is a small part of their business. You still have lots of paperwork and taxes and general business overhead.
  - listenallyall 4y ago
    Now add labor cost of a person to stand by the tee box all day and validate potential winners.
- Slartie 4y ago
  That's exactly what I thought as well: build a golf course that's effectively a giant funnel, with the hole deep down in the bottom spot where the ball inevitably ends up. The entire thing must be large enough to have enough "yardage" to get a low insurance premium. Register that course for a nice 10m$ hole-in-one insurance. Profit!

MivLives 4y ago

I'd love to see the weird trends they find on some of the bigger more complex algorithms. Like people who drive red cars born July 2000 with a pet bird are 8 times more likely to get in an accident if they primarily drive near Chicago or Miami. I'm sure it's not that granular but I can dream.

t_mann 4y ago
People who drive red cars born July 2000 with a pet bird are 8 times more likely to get in an accident if they primarily drive near Chicago or Miami Hopefully they know their stats modelling well enough to know that's not an actual signal.
- PeterisP 4y ago
  Ach, there may well there be signal in there (and the insurance companies do enough stats modelling to tell if there is) - I mean, isn't the car color a well known example where the people's tendency to drive recklessly is correlated with their choice of buying a boring color or a flashy one?
- petercooper 4y ago
  One of the things that swings the price a fair bit in the UK is your job title which has always intrigued me as a signal. I could understand if it's someone using their car for deliveries or as a race car, but I'm unsure why a "counsellor" could be paying double the premiums of a "Web developer" on standard insurance.
  - ev1 4y ago
    I've been told by an agent before that a "web developer" at a contractor/wordpress body shop-type will be less likely to take risks, while a "web developer" at FB or G would be more likely to do things like rock climb, drive into the middle of nowhere, drive faster.
- function_seven 4y ago
  Heh. “I think you're overfitting here, no?” “That may be, but as your insurance agent, I recommend getting rid of the bird to save money on your premiums.”
nradov 4y ago
Most state insurance commissions have strict rules that limit the factors which insurers are allowed to use for setting auto insurance premiums.

SamReidHughes 4y ago

Hole in one probability can vary by a large factor depending on hole location and green contour. If that's all they consider, either they're heavily profitable or some tournaments could break even.

dgritsko 4y ago
True. Approximate skill of the golfer could also be an important factor - the article even mentions three LPGA golfers getting holes-in-one in the same tournament. Presumably they were quite a bit more talented than your average entrant.
- pjlegato 4y ago
  The article mentions in passing that pro golfers are usually excluded from the standard / cheaper insurance policies.
supernewton 4y ago
From the article, a 100 golfer tournament with a hole in one prize of $7500 costs $187 in premiums. If the hole in one probability of each golfer is 1/12500, the expected payout is only $7500/12500*100=$60, so I'm going with "hugely profitable".
- eru 4y ago
  I'd go with: the actual actuarial cost of the hole-in-one payout is a small part of their business. You still have lots of paperwork and taxes and general business overhead.
- listenallyall 4y ago
  Now add labor cost of a person to stand by the tee box all day and validate potential winners.
Slartie 4y ago
That's exactly what I thought as well: build a golf course that's effectively a giant funnel, with the hole deep down in the bottom spot where the ball inevitably ends up. The entire thing must be large enough to have enough "yardage" to get a low insurance premium. Register that course for a nice 10m$ hole-in-one insurance. Profit!