Protection from unlikely events.
>If they get it too right they put themselves out of business.
No, they don't. Getting it too right just means they are able to more effectively compete on pricing since they know the lowest price they can offer while still making profit.
the point of insurance is to cover for unlikely events not expected events (like you needing increase healthcare support as you age)
What? How is it you think insurance companies make money exactly? And why would getting better at predicting risk stop them doing that?
The value of insurance (and why we pay for their profits) is in spreading risk across populations. They already target particular demographics (when the law allows them to), but I'm talking about targeting individuals.
If the insurance company can predict exactly how much they will be paying out to you in the next 10 years, say, then they just become a glorified savings account with a cost attached (their profit). The value is then essentially telling you how much you need to save. Data companies like 23&Me could then offer this without bothering with the savings account part.
My feeling is people won't accept this and will want actual insurance policies that actually spread risk across populations because people don't want to be told "you need to save twice as much as your neighbour because of your cancer in 15 years time".
Unless they have a crystal ball and can tell you whether or not you will be involved in an accident leading to serious injury (and the nature of those injuries) then you still need health insurance.
I know a guy who was robbed and shot. Had to have surgery and spent a few weeks in the hospital.
I have a neighbor that was jogging, tripped over a bump in the sidewalk and broke his arm. Few weeks in a cast.
I know plenty of blue collar workers who had on the job injuries that required medical treatment.
Your DNA isn't going to help with that. And in America, a simple 4 hour visit to the ER can result in a multi-thousand dollar bill. And if you're unfortunate enough to need a surgery and a multi-week stay then we're talking 5 figures minimum.
As a result the incentive to get comprehensive health insurance rather than just disaster insurance would plummet, as an MSA would be more cost effective and you also get to take advantage of better than predicted health outcomes in the form of interest earned and at EOL a potential inheritance gift.
Sounds great, except you jhave to understand that this would mean that society would somehow need to deal with the burden of the least healthy, who would be very unlikely to purchase, or be able to afford, insurance under this scheme. It’s like trying to charge up front for building roads. You just end up with no roads. Socialism (or in the case of insurance,capital funded socialism) is extremely beneficial to society in certain specific verticals.
I asked them what the end game is. What happens when everyone's insurance policy is exactly tailored to them? What is the point of insurance then? If they get it too right they put themselves out of business. They didn't have a good answer.