An insurance company would have to drastically shrink, and so would its net profits, to do as you describe. So it quite obviously won't happen. Premiums will remain where they are. The price floor is effectively established.
(I do look forward to the next permutation, "well what if somebody lowers prices," so we can have a good round of explaining what a cartel is.)
I get concerns about privacy & whether the market forces will actually work. But, pricing risk is also the fundamental business of insurance, so it seems very intuitive & logical for them to add additional parameters to quantify risk in their models. The better they can quantify the risk, the more competitive their rates can be, and the more successful they are as a business.
But where is their price floor right now compared to their operating margins?
If the business is mostly actuarial risk, then dramatically lowering that risk by more accurately characterizing good and bad drivers would see premiums plummet.
If the business is mostly SG&A, then better assessing individual risk would be misapplied optimization and wouldn't affect premiums much at all.
(I do look forward to the next permutation, "well what if somebody lowers prices," so we can have a good round of explaining what a cartel is.)
Do you have good reason to think that car insurers have formed a cartel?