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0 pointsmb77331y ago0 comments

This doesn't make sense. If an insurance company wanted to charge higher premiums, they would just do so. They wouldn't need to spy on customers.

The point of them trying to quantify risk as accurately as possible is to be able to extract profit while also offering competitive rates.

It's the same as with any other company. They try and operate as efficiently as possible (ie. reduce costs) to try and make more profit, while competing on price.

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tfehring1y ago

> * If an insurance company wanted to charge higher premiums, they would just do so.*

That’s not an option in many cases. The first homeowner featured in the article is in rural Northern California. CA’s insurance regulator has been extremely restrictive about letting insurers raise rates, especially in that area, so her insurance premium was probably a fraction of the expected cost of insurance claims.

lokar1y ago

My insurance company sent an inspector to check the house. As a result he adjusted some details of the policy that reduced the rate slightly.

currymj1y ago

from reading this article, it seems like there may be some odd short-term pressures, or incentives internal to the companies, that mean policies are getting cancelled based on clearly inaccurate information.

VHRanger1y ago

Ah, classic mistake here.

If bargaining power is asymmetric between the insurer and the buyer, then the extra information is used for additional price discrimination (eg. Its better for you if the picture is never taken regardless who you are).

So the question is: does the insurer or the insured have the bargaining power here? Competition helps, but is only one part of it.

Seeing that insurers seem very profitable in the US, a decent proxy for bargaining power, I'd argue this is a bad thing for the consumer.

bvan1y ago

If insurance was very profitable ‘in the US’, top-tier insurers would not be leaving states like Florida and California. There is a reason why they decide to no longer cover wildfire losses or hurricane losses. In the case of Florida, rampant fraud has turned the market into a basket-case.

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