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What would you rather have? Insurers using broad classes and heuristics about you to put you in a bucket that may not always be fair, or a company like Google who knows about your life to an extreme amount of detail calculating exactly how much risk you pose and providing that to the insurers as a service?

If you don't want to be put by insurers into buckets, well, all I can say is, be careful what you wish for.




Personally, I'd rather car insurance were tailored as individually as possible. If I could get that option without my data ever leaving Google's silo, I would do it in a heartbeat. Then again, I know I'm very low risk compared to most people.

In general, I do think it's good that people pay insurance based on the real risk of loss they pose. I'm fine with this in the case of umbrella insurance, car insurance, home insurance, life insurance, etc. The only exception I have is health insurance, because I don't think people should die of curable illnesses, just because they can't afford treatment.

But if someone poses a high risk of causing a car accident, I prefer that they not be able to drive. If someone is likely to burn their house down (maybe they're into basement welding), they probably should have to pay more to insure it. Insurance companies know that many people would prefer to subject themselves to the panopticon to save money, which is why some of them are starting to offer the option of installing a speed tracker in your car, among other things.

I recognize that this is not everyone's preference of course, but you asked, so I thought I might give you some perspective from someone who thinks differently from you.


> Personally, I'd rather car insurance were tailored as individually as possible.

Aren't you then saying that ultimately you would prefer if insurance didn't exist?

I mean, that would asymptotically approach a prediction of your personal future losses, and thus your premiums would asymptotically approach your future losses, and thus what's the point of giving your money to an insurance company only to get it back later?

But why wait for insurance to not exist, really? For most things, you can actually get exactly and ideally, without any approximation, what you wish for: Just don't buy insurance, and you will only pay for exactly your individual risk--there is no way to tailor your insurance more individually than that, is there?


I don’t think you can predict risk well enough for that to come true. No matter the predictive power, real life still carries probabilistic nature. We can assign 0.0001 probability to somebody’s house burning down, but in real life it either will, or will not.

They can then choose to skip insurance, and carry a very small risk of loosing a lot of money. Or buy insurance, and carry a very high probability of wasting much smaller amount of money.


> I don’t think you can predict risk well enough for that to come true.

Which doesn't change that that is the ideal goal that GP is suggesting, right?

> No matter the predictive power, real life still carries probabilistic nature. We can assign 0.0001 probability to somebody’s house burning down, but in real life it either will, or will not.

The question was not whether the goal is reachable. The question was whether the goal is actually a good idea. And in order to evaluate that, you have to consider the consequences of the hypothetical case that it is reachable.

> They can then choose to skip insurance, and carry a very small risk of loosing a lot of money. Or buy insurance, and carry a very high probability of wasting much smaller amount of money.

What do probabilities matter to the outcome here? If a hypothetical insurance company managed to achieve the ideal goal with regards to fire insurance, in that they made the insurance as individual as (logically) possible, that would by definition mean that they would charge a premium only from exactly those people whose houses would in fact burn down lateron, and then pay them back when it does indeed burn down. Not insuring yourself gets you exactly the same end result that you would get in that hypothetical world: If your house does not burn down, you don't pay anything and you don't get anything back, and if your house does burn down, you pay/save massive insurance premiums that you later get paid back/have in your savings account. Or rather, you don't, in the latter case, because you can't afford it. So, if you think that that is a goal to strive for, why not realize it for yourself now?


> The question was not whether the goal is reachable. The question was whether the goal is actually a good idea. And in order to evaluate that, you have to consider the consequences of the hypothetical case that it is reachable.

So: yes, it would be ideal if we could predict all traffic collisions and all home fires. And indeed if that were true, insurance wouldn't exist. But that's not a very enlightening scenario.

> If a hypothetical insurance company managed to achieve the ideal goal with regards to fire insurance, in that they made the insurance as individual as (logically) possible, that would by definition mean that they would charge a premium only from exactly those people whose houses would in fact burn down lateron, and then pay them back when it does indeed burn down. Not insuring yourself gets you exactly the same end result that you would get in that hypothetical world: If your house does not burn down, you don't pay anything and you don't get anything back, and if your house does burn down, you pay/save massive insurance premiums that you later get paid back/have in your savings account.

Indeed, but that's because the insurance company can accurately predict what will cause house fires. And people could use that prediction: if taking up welding means my insurance premium goes from 0 to 300k because I'm definitely going to burn my house down if I take up welding, I can use that information to make an informed decision about whether to take up welding.

> So, if you think that that is a goal to strive for, why not realize it for yourself now?

How? Where can I get a quote, now, on whether a given hobby/lifestyle change is going to lead to me burning down my house?


Only if "as individually as possible" means perfect prediction. If you assume that there's a limit to how well the future can be predicted, insurance still has value.

Also, car insurance specifically is usually legally mandated. There's a tangible benefit to having it (being allowed to drive) besides the risk mitigation.


> Only if "as individually as possible" means perfect prediction. If you assume that there's a limit to how well the future can be predicted, insurance still has value.

The question was not whether insurance has value if that ideal goal is not going to be reached. The question was whether the goal makes sense in the first place.

> Also, car insurance specifically is usually legally mandated. There's a tangible benefit to having it (being allowed to drive) besides the risk mitigation.

Which admittedly does not allow GP to realize this now with regards to car insurance, true.


> I mean, that would asymptotically approach a prediction of your personal future losses, and thus your premiums would asymptotically approach your future losses, and thus what's the point of giving your money to an insurance company only to get it back later?

If we could estimate that well, risk would no longer be a real thing, and then there would be no need for insurance at all. However, you can't just take ideas to the absolute theoretical limit and expect the results to come out making sense in the real world.


> If we could estimate that well, risk would no longer be a real thing, and then there would be no need for insurance at all.

Or maybe there would?

> However, you can't just take ideas to the absolute theoretical limit and expect the results to come out making sense in the real world.

Erm ... yes, you can, and you should? If you don't actually mean "as individually as possible", then you presumably mean "more individual than now, up to the point where I wouldn't agree anymore", which is essentially a vacuous statement.

Either you actually mean your idea, or you don't. If you don't mean it, then it's up to you to clarify, not up to me to make assumptions about what you might have meant.


Take "as individually as possible," to mean, "as individually as practically possible," rather than, "as individually as theoretically possible," and you'll have a better understanding of what I was trying to communicate.


Well, where I live that is not allowed by law. You must have an insurance and if you don't you will get an expensive one automatically to protect others. The second problem is that if somebody causes an accident for me, that person needs to be able to pay. Without an insurance what's ensuring me that there's money on the other end? The only viable alternative to monthly payments is to have a big sum up front or the safety to take a loan if something should happen.


I don't necessarily disagree with you. I posed that question because if Google actually did provide that kind of service, people here would be up in arms against it.

And god forbid if Facebook or Uber did [mind you that Uber is in a reasonably good position to], they would be sharpening the guillotines and calling for Zuck's and Travis' heads.


> Personally, I'd rather car insurance were tailored as individually as possible.

It exists. It is called self-insurance where the number of insured parties is 1.


No, I still value risk smoothing. I know a lot about my driving skill, but I don't have the ability to make perfect predictions about all possible future losses.


I would favour indiviualised pricing and I don't think it would be too hard to achieve without getting too invasive. Basically, your driving record should speak for itself over time.

The problem would be that approach is that insurance companies want to be able to keep an element of fuzziness in their pricing. Predictable pricing is the last thing they want. Why do they only care about beating your current quote, but have no interest in what you were paying for insurance in years gone by? If you have a 10+ year history of perfect driving in dull boring cars, how can insurance companies significantly increase your premium without being able to justify why they suddenly think you are now riskier?

By putting people in buckets they can adjust prices without singling anyone out, and as a by product keep the consume a bit confused abut what is going on.

I see it happening all the time. Drivers with no claims, no points, no convictions and who drive safe, dull dull cars suddenly having the premiums increased. Its not because of them or what they did, its because the insurance company decided to put them in a bucket that justified a price hike.


I would like car insurers to be only allowed to ask a limited white-listed list of options:

* Address * Where you keep your car * Typical mileage * Car model & age

That's probably it. In addition they shouldn't be allowed to use age as a discriminator (we don't do that for National Insurance in the UK and it works well).

It's ridiculous that they ask for things like your job and your marital status.


You haven't said why it is ridiculous. You have merely just asserted it.

Why is it okay to ask for the car model? Yeah you can say that very old cars or specifically unsafe cars might have worse risk profiles but most modern cars (made in the last 10 years, for example) are more or less all road safe yet their risk buckets are different. That's not because of the car itself, it's because of the kinds of drivers who end up buying them. So we are back to the 'hotmail' argument.


It's ok for comprehensive cover because the cost to repair or replace different cars varies.

For third party actually I think you are right - it shouldn't depend on the specific model you drive, but it could depend on the power, e.g. you're more likely to crash in a fast car.

The point is insurance premiums shouldn't depend on things that you can't realistically change like your age, medical history, salary, marital status etc.




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