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Insurance works on the basis of (a) quantifying risk and (b) charging fairly for the protection. In the long-term, getting better at (a) and consequently, (b),
by bvan 3y ago
Insurance works on the basis of (a) quantifying risk and (b) charging fairly for the protection. In the long-term, getting better at (a) and consequently, (b), is in everybody’s interest. For far too long, certain risk covers have been under-charged. At the end of the day, difficulty in finding affordable insurance, or any insurance at all, tells you something about the level of risk and the ability of insurers to charge appropriately for it. Regulators are often way behind the curve, to the detriment of insurers and consumers.
- rchaud 3y agoIf this were true, health insurers would have taken a cudgel to the US hospital system decades ago and come up with a more efficient system. They haven't because an opaque system allows them to maintain their own opaque practices.
- selectodude 3y agoHealth insurance companies don’t care about what your doctor earns in the same way home insurance companies don’t care about the cost of the roofer. They’re going to price in whatever that cost may be and call it a day. Health insurance has it easier too because there’s not really a concept of correlated risk in human populations. Most people do a decent job avoiding hurting themselves but when a flood comes, there’s not a whole lot anybody can do.
- jenny91 3y agoCOVID?
- chug 3y agoHealth insurance companies do actually care, unfortunately. They're incentivized to embrace higher prices since they have to spend at least 80% of premiums on payouts. If you have a fixed margin, well, you have to increase premiums to increase profit, so higher prices means more profit.
- bvan 3y agoProperty insurance and health or life insurance are very different markets.
- knallfrosch 3y agoRelated: Climate change is coming for America’s property market Insurance is supposed to signal risk. Policymakers should let it https://www.economist.com/leaders/2023/09/21/climate-change-is-coming-for-americas-property-market https://www.economist.com/leaders/2023/09/21/climate-change-... Parts of America are becoming uninsurable Blame growth in hazardous areas, climate change and bad policy https://www.economist.com/united-states/2023/09/21/parts-of-america-are-becoming-uninsurable https://www.economist.com/united-states/2023/09/21/parts-of-...
- _tom_ 3y agoAnd (c) in the long term influence the risk. Insurance companies have long worked to improve auto safety. This benefits everyone. This needs to be applied to more significant risks, like fire flood and storm. I think we have to get much more serious about prevention. People are doing this: Fire safety: https://www.npr.org/2023/08/24/1195331310/red-roof-house-fires-lahaina-hawaii https://www.npr.org/2023/08/24/1195331310/red-roof-house-fir... Storm safety: https://abcnews.go.com/US/mexico-beach-home-survives-hurricane-michael-virtually-untouched/story?id=58505662 https://abcnews.go.com/US/mexico-beach-home-survives-hurrica... We need to mandate this kind of building in new construction and modified construction. It may be worthwhile to subsidize this, to help with turning existing high risks into low risks. We need to be more severe on forbidding building in danger zones, and more accepting of insurers pricing these based on risk, so they don't have to leave the state, and others can be priced to more common levels of risk. We also need to not allow rebuilding in areas that will have these problems again, without some way of mitigating. We should not have to pay for someone's third house in a flood zone. But if you can make it flood proof after the first one, great.
- imgabe 3y ago> This needs to be applied to more significant risks, like fire flood and storm. It is. The NFPA (National Fire Protection Agency) writes the National Electric Code and other safety codes that get adopted into law as building codes. It was started by a coalition of insurance agencies. https://en.wikipedia.org/wiki/National_Fire_Protection_Association https://en.wikipedia.org/wiki/National_Fire_Protection_Assoc...