You buy insurance if there is an uncertain outcome, e.g. a 1% probability of having a $100k claim. In which case you can expect to be charged around 1% of $100k (plus admin costs and whatnot).
Perfect information means you know the exact probability of the event happening. It doesn't mean that you know with certainty whether an event will happen or not. That would require a crystal ball or a time machine.
It’s just a thought experiment, but the more information they have on us, the more relevant it becomes.
Perfect information means they know your risk level to the best possible accuracy, which would really only apply to populations.
Perfect information means they insure 1000 people and predict they’ll have one bad accident per year. After ten years they covered for ten accidents. All ten could have occurred in the first year and they would still be correct.
That’s why it’s a thought experiment, and not real life.
> Perfect information means…
No, that’s not what was meant by perfect information in this instance.
It’s hyperbole of sorts, but it highlights that until such a time, raising the cost of insurance doesn’t just punish the people who actually cause the damage.
The personal risk component can be accounted by “perfect” information and that component can get bigger or smaller depending on your definition of perfect, but there’s another component which can’t.
Maybe you could argue you shouldn’t have to cover medical expenses if we had a single payer system—the money to mitigate medical risk from driving still has to come from somewhere.
Maybe you could argue that damage to property should come from those property owners’ insurance.
What if you don’t get into a terrible accident, you just get into a boring accident where you total your car and don’t hurt anyone. You know the odds of this are low, chances are it won’t happen in your life, but it will probably happen to someone you know. What if it happens to you, when you’re very young and have a new car? You haven’t had a chance to put away any money in your piggy bank yet. You need to replace your car now. How does a piggy bank help you?
The pay-as-you-drive model might paint a picture of a more equal playing field, where everyone pays what they are due, but I think it is mostly a sham to squeeze more money out of people.
The truth is insurance agencies always want to find a reason to increase your premiums, because the law says you can't just increase the premiums for no reason. Most premiums are lower than what it "needs" to be, so if they find an excuse, they will jack up the premiums.
How does this work? Are you saying all the insurance companies share data and collude to set your rate? Or they just hope you don't price shop every year or two and jump to an offering that is under the legal limit (whatever that is)? My state has over 50 auto insurance companies, so I don't see why they would have to resort to tricks like that to increase your rate in an unfair way.
Insurance companies have actuaries to classify risk. They're not asking armchair drivers on hacker news to determine what is dangerous or not.
What prevents one company from defecting and taking all the market share?
Insurance companies do in fact compete on rates.
Swerving to avoid road debris or hard braking to avoid a deer as examples of what have cost commercial drivers jobs.
Look at the CDL world for a view into this.
I have 30 years of clean driving records BTW, so not trying to justify risky driving BTW
When your kid runs in the road. Do you want the to avoid an accident, or do you want to optimize for them just turning enough so they don't lose their insurance.
When traffic ahead of you makes an emergency stop, do you want the person behind you at a safe distance to error on stopping earlier or do you want to add an incentive to just stop right before your bumper?
There is a reason emergency braking is a popular feature. Humans tend to no apply brakes early or hard enough, even when no distracted.
Otherwise safe drivers are punished also because it isn't a reliable metric, so the actuaries know that they can't tell crash avoidance from risky behavior.
If you know about training fleets and semis, you can see these new drivers taking risks that they should not be taking.
Give it a decade and a lot lost or shattered lives and I would guess these will either abandoned or not supported by the reinsurance industry. Possibly just being another source of income to the companies to sell to data brokers.
Minor nit: I expect someone driving in a suburb to pay more in premiums because...deer can't sue you.
While reducing speed when you see deer is important, you won't see the one you hit.
In my case it jumped over a road barrier from below, it would have been impossible to see.
But human perception is limited, the best drivers I know (not including myself in this) respect their limits.
Urban areas have higher rates because there tend to be more conflicts, it is just mathematics.
Pedestrians, dogs, etc.. all work as replacements for deer above.
"Won't see it?"
You can't argue that all else equal, driving during the day is as likely to hit a pronghorn as driving at night. Not calling you a liar, but I'm skeptical.
Mine happened on a lunch break, can't see through rock either.
But you only see a fraction of the wildlife that is there. If your sole stratagy is to see them you may be surprised how many deer hit the sides of cars.
Complacency and selective attention are very real human problems.
The classic basketball game example of selective attention if you don't buy it.
They're probably right because the average includes a lot of people who chronically create carnage like drunks, teenagers and that old woman everyone has in their extended family who swears she's a good because she managed to not be found responsible for the dozen accidents she's been in.
Now, if 90% of people said they were better than median that would be concerning.
I think they key sticking points are 1) Why isnt aggregate claim data good enough for this purpose? 2) Do we prefer erroneous risk estimation from bad personal profiles over erroneous risk estimation from group averages.
My sister lives in a dense area of a major city and sees pest deer every day.
I hate insurances and their hidden shenanigany-like algorithms but at the end it is a fair game I when you look at the big picture.
I never owned a car but I feel deeply concerned as I use the road by foot, bike and rentals and am often scared by the drivers usage of the road. You know : texting, updating gps, driving full speed in turns without visibility, taking over as Schumacher in the last lap… I’m mean yes it’s safe for the other ones in bigger cars and themselves until no deer encounter.
The speed limit is a LIMIT not a requirement. And don’t start me with "you’re dangerous driving so slow" lol.
But after traffic analysis by engineers, the final number is set by politicians.
It certainly is. Speed differential is a huge cause of serious accidents. That can be driving too fast or too slow. Many roads have minimum speeds, and as a commuting cyclist I can tell you the biggest threat is not being able to move with the general flow of traffic.
I'm also not sure how you came up with driving slower and smooth breaking being correlated, especially if you do limited driving.
> slower and smooth breaking being correlated
The energy of a moving object is proportional to the square of the speed, but your braving force is constant. If you want to decelerate from Xkm.h to 0km.h before the deer at 100m ahead, you’ll have a smoother stop if you drive slower. And that don’t even take reaction time into account.
> especially if you do limited driving.
Limited on a daily basis but it’s been 20 years I learned to drive and do it regularly for occasions like week ends, road trips, helping parents, going to buy heavy appliances etc… also riding a bicycle share many thinks with driving a car, a truc or a motorcycle.
There are many places that have minimum speed limits as well.
The future world will become more and more brittle/brutal for us randos because we are 100% disposable in the future tech bro libertarian dystopia. If any situation puts us outside their standard use cases and automated support systems ability to resolve issues we are purged from the system. And when all of society is manage by those types of systems you are hit.
Yah yah insurance reduces risks instead of adding it like gambling, but the analogies are still there.