They can't do that because other companies will undercut them to gain market share. They could collude to set prices, but that's illegal in the US. Also, some auto insurance companies aren't organized as corporations, such as the Auto Club of Southern California, which is a not-for-profit mutual. They aren't saints, but since they redistribute most of their profits to policyholders, they don't really have much incentive to keep prices high.

> They could collude to set prices, but that's illegal in the US.

Interestingly, that is not true for insurance companies[0], at least at the federal level. They are exempt from a lot of federal law.

>The McCarran–Ferguson Act, 15 U.S.C. §§ 1011-1015, also known as Public Law 15,[1] is a United States federal law that exempts the business of insurance from most federal regulation, including federal antitrust laws to a limited extent.

[0]https://en.wikipedia.org/wiki/McCarran%E2%80%93Ferguson_Act

Corporations have been doing illegal things for a while now. All you have to do is to share a reasonable part of illegal proceedings with the government - it's called a 'fine'.

Please don't be edgy and dismissive on HN

I am not edgy, I am pointing out that just if something is 'illegal' it does not mean corporations won't do it.

The fact that something is illegal means that there is a risk in doing it, and a cost in hiding it. It's not quite the same situation as if colluding were completely legal and above-the-board.

Fair point, and in the context of Uber, this is particularly true

> The government mandates we MUST have insurance, so they know they've got a continued source of business. The average American has absolutely no way to correlate the amount they pay for insurance to what it costs the insurance company.

I have a hard time reconciling these two sentences. In the first, you sound like a passionate advocate of the free market. In the second, you act as though you have never heard of such a thing.

N.b. Personally, I am much happier knowing that (almost) all the people potentially plowing into me on the highway carry insurance.

Free Market is the US does not contain a well-informed consumer segment. That is the issue of the second sentence.

>N.b. Personally, I am much happier knowing that (almost) all the people potentially plowing into me on the highway carry insurance.

Do you live in the US? Where 1 in 7 drivers are uninsured?

Citation on the 1 in 7?

That sounds like it comes from the same people who make any speeding offense on par with DUI and having an at fault accident in most points based systems. One in seven people with a license not having insurance I can see (because they might not have a vehicle) but one in seven vehicle/driver pairs on the road not being insured for that combination seems very high without monkeying around with the statistics.

It actually sounds like a somewhat outdated (the trend is down and the most recent figure I can find is about 1 in 8 [0], rather than 1 in 7) figure derived from insurance claims (which may systematically misstate the share of drivers or driver/vehicle pairs, but probably is reasonably accurate in determining what people actually care about -- if I need to go after someone for damages resulting from an accident, will they have insurance? -- except to the extent that insured drivers are more or less likely to be in an accident with an uninsured driver vs. an insured driver, all other things being equal.)

[0] http://www.iii.org/fact-statistic/uninsured-motorists

How do they define "uninsured."

My girlfriend isn't on my policy because she never drives my truck. Likewise the vast majority of the time I drive her car it's something along the lines of repositioning vehicles in the driveway. If I were to get in an accident in her car chances are there'd be a bunch of fighting with insurance but our insurance (same company, different policies) would probably wind up paying. Would I count as an uninsured motorist in that hypothetical situation? III has a very obvious incentive to portray insurance as something worth having as opposed to a waste of money (which it will be for most people who don't get into a situation involving medical or large amounts of property damage). I think they'd consider me uninsured in that situation.

Reporting rates also have an effect. There's a much higher reporting rate for small accidents with a single uninsured party than for similar accidents in which both parties are insured. If one party is insured it's in that parties interest to maximize documentation unless it's undeniably their fault. If both parties are insured then it's much murkier, damage amount, deductibles, who's at fault, etc, etc. come into play and if the dollar amount is relatively low it's often more faster and cheaper for them to settle the matter without insurance company involvement. Basically, if someone without insurance gets in a parking lot accident the vast majority of people will report it whereas that's not necessarily the case when both parties are insured.

"Percentage of uninsured drivers, as measured by the ratio of uninsured motorists (UM) claims to bodily injury (BI) claim frequencies."

This holds for my outdated one in seven number and the new 12.6% that GP linked.

Exactly, and keep in mind many states have moved to a 'no-fault' model. So they don't actually care who is at fault for the accident anymore. So the question becomes, why doesn't everyone just insure themselves (IE. Their own car/medical bills to the level they are comfortable with) rather than insuring everyone else and praying the guy that hit you does the same.

Affordable and accessible medical care is a prerequisite to that. After the injury aspect is taken out of the picture then it would make sense for everyone to insure as much as they want (e.g. homeowners insurance)

If I don't want to be insured for own personal bodily injury, why should I be forced to buy that product in a free market? What if the premium simply isn't cost effective? By forcing anyone to buy a product you are creating a captive market and thus insane prices. Especially when the businesses involved are explicitly allowed to collude[0]. Sounds like a bad deal for everyone but the insurance companies.

[0]https://en.wikipedia.org/wiki/McCarran%E2%80%93Ferguson_Act

My intention was to point out that if the medical side of things was a non-issue it would be much easier for society to get behind the idea of "just insure your own property however much you want"

> Free Market is the US does not contain a well-informed consumer segment.

So the claim boils boils down to, people don't know how to shop around for auto insurance? Forgive me for scoffing.

And 1 in 7 is a lot lower than it would be otherwise.

Just because I can buy the same product from a number of different stores doesn't make me a well-informed consumer.

> Personally, I am much happier knowing that (almost) all the people potentially plowing into me on the highway carry insurance.

Where do you live? While most people are legally required to the penalties for not carrying it are so weak where Im at a lot of people do not.

No, it (quite reasonably!) mandates that you must prove financial responsibility to a certain level[1] if you're going to pilot a two-ton hunk of metal at 70 mph around other people doing the same.

That has the side effect of requiring the typical person to buy insurance, as they can't afford the alternate means of establishing it.

Do you think that's somehow unreasonable? What standard would you prefer for determining when an activity should require such advance indemnification, and how does "driving a car" fail that?

Edit: Sorry if you just meant to make the bland, neutral point that more casualties -> more insurance revenue -> more insurance profit, but your tone suggested you think it's an unfair subsidy somehow.

[1] It varies, but here's California's form for alternately proving responsibility, which only requires you put up a bond of $35k, which IMHO is ridiculously low considering how much you could fairly be held liable for. I guess the logic is that "if you don't mind setting aside that much money, you must have enough seize-able assets in case you harm someone"? https://www.dmv.ca.gov/portal/wcm/connect/3a81272a-0834-43b6...

Most any reasonable person can make ~$1500 a year investing that $35K. So it doesn't seem like such a good savings considering you won't make that money on investing it, and you're almost certain to lose a lot more than than $35K if you're at fault in an accident.

If a large company like Google, Tesla or Uber owns a fleet of self driving cars, they can just self-insure. (The claims will average out to a well understood statistical distribution, and they simply set aside enough money to pay those claims.)

Only if the industry as a whole agrees to not cut rates, and nobody new enters the market. In a competitive market, if the cost goes down (as would happen with fewer accidents) then the rates will drop.

I'm curious if we could see a future where the car manufacturers provide insurance for their product, and you would buy a combined hardware/software/updates/insurance subscription package from a manufacturer. It seems like the inevitable conclusion of all the debate around who's ultimately responsible for the actions a self-driving car takes.

> The government mandates we MUST have insurance

Actually, in California, the government does not. You must have either a certain specified minimum level of insurance or a post a specified minimum surety bond.

This sounds like a distinction without much of a difference.

It makes a difference because insurance companies don't have unlimited ability (even collectively) to set prices, since there if an alternative that they don't control.

> The government mandates we MUST have insurance

This becomes absurd with self-driving cars. There are three types of collisions with human-driven cars:

1. Those caused by driver negligence.

2. Those caused by the owner failing to properly maintain their vehicle.

3. Those caused by a manufacturing defect.

With self-driving cars, the first one is impossible. A car that follows the law to the letter is by definition never at fault in a collision. The second one is still possible, but probably less likely. The car can take itself to the shop without your intervention, and I expect manufacturers would have it refuse to drive itself if you're too far off the maintenance schedule. The third category will now include bugs in the driving software, so the rate of collisions that fall under option 3 is likely to go up a bit.

Option 3 means that the manufacturer is liable, not the owner of the car. Since this encompasses the vast majority of self-driving car collisions, personal liability will no longer be truly necessary like it is today.

> With self-driving cars, the first one is impossible. A car that follows the law to the letter is by definition never at fault in a collision.

You can still be "at fault" even if you followed the law in a collision. Laws - particularly driving laws - are not always black and white.

The I will buy 1 usd nominal insurance from my car manufacturer along with buying the car. Or more likely get it for free with my accident and theft insurance.

If that is true, why don't they increase profits already? Why wait until self driving cars have arrived?

competition?

I'm convinced that the ability to shop for and purchase auto insurance online is the best thing (for consumers) to happen to the industry in a long time. Better rates, better claims processing, better customer service.