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Comment by annoyingnoob | Hacker News Reader

I was rear-ended in stop-and-go traffic. The same person was behind me for miles. He was looking at his phone and ran into me - totally and completely not my fault. He refused to give me his insurance info. I made a claim against my own insurance. I'm pretty sure the insurance company went after him and recovered costs. How exactly should that influence my rates? This is exactly why I pay for insurance, service I already pay for that is already factored into the costs. I pay extra for the zip code I live in already.

I have no driving record and I've caused no accidents. If I put a tracking device in my car today my rates would go up because I accelerate quickly and brake hard when conditions allow. That is not right.

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Your insurance company would prefer to cover people who notice the reckless driver then pull over to get out of their path.

You did not do that, so they raise your rates.

Edit: not that you were at fault or did anything wrong.

My point is that the insurance companies strongest incentive is to pay out as little as possible. This includes payments made where their client was not at fault. If it were up to them, everyone would pay all their premiums on time and never drive.

They recovered their costs. I already pay for the service. Tracking is just another excuse to raise rates, which as you note is the goal (bring money in, don't let it out). When rates have nothing to do with liability is it really insurance?

To quote wikipedia: If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, then it is not likely that the insurance will be purchased, even if on offer. Furthermore, as the accounting profession formally recognizes in financial accounting standards, the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, then the transaction may have the form of insurance, but not the substance (see the U.S. Financial Accounting Standards Board pronouncement number 113: "Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts"). https://en.wikipedia.org/wiki/Insurance

You pay either way.

It's not about covering costs to provide a needed service. That would be a public service

This is a private company looking for profit. They want to raise your rates.

What you are talking about would no longer be considered insurance.

> the accounting profession formally recognizes in financial accounting standards, the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer

The vast majority of automobiles do not hold their value, they depreciate over time. If I've had my car for say 5 years and I've paid the premiums for 5 years, I may have already paid the full value of my car as it is today due to depreciation. I probably pay for one minor incident per year in premiums. Unless I total my within the first 5 years I'm not really getting insurance what I'm really getting is a payment plan for a payout I most likely will never get.

The payout is the risk you transferred to the insurance company. You’re not “supposed” to get all your premiums back because then why would anyone start an insurance company? Its not a bank account, its more like a lottery ticket. The insurer assumes risk of covering an accident in exchange for the guaranteed income of your monthly premiums. In return you exchange a fixed regular payment for protection against an unlikely event. In order for this arrangment to work, the insurer must make a profit.

You might understand this but many people today do not, which is why they expect medical insurance to cover 100% probability events like an annual checkup with the primary care physician.

I'm not asking for my premiums back and don't expect it. Just saying that after 5 years of premiums the insurance company would be break even on that policy. If premiums are high enough its not really insurance. Not that everyone has the same insurance company but generally if everyone has paid premiums that meet the value of the car after 5 years then all of the insurance company risk is with cars less than 5 years old. The insurance company will keep pushing for more intrusion into your life to 'give you the best rate' but really you'll just pay more. Like you said if it wasn't profitable then no one would do it. Making apps and integrating with telematics doesn't come for free and its not coming out of the insurance company bottom line.

well how much capital are you investing for 5 years at zero percent return? I think if that was required for an insurance company there would be no insurance companies.

> Making apps and integrating with telematics doesn't come for free and its not coming out of the insurance company bottom line.

yes, it is. their bottom line has to make room for that by increasing prices. in insurance as in anything, you get what you pay for.

I believe most insurance also covers the damage done by your vehicle to other property. So the upper limit on the total collected through premiums is somewhere between 0 and the cost of an expensive house.

It's actually more along the lines of whatever a person's life is worth. Also where I live the ~3 cars around me in traffic could each cost more than a nearby home. You can pretty easily destroy $400,000 of property here in an otherwise uneventful accident.

Automobile deaths has been declining for years. https://en.wikipedia.org/wiki/Motor_vehicle_fatality_rate_in...

Cars are safer than ever. https://one.nhtsa.gov/nhtsa/timeline/index.html

The folks with those fancy cars are paying into the system too, insurance is about pooling after all.

It seems you have a point about bodily injury claims. https://www.insurance-research.org/sites/default/files/downl...

However, it looks like that is mostly due to more lawyers being involved in bodily injury claims. More lawyers involved points to a failure with insurance company's ability to properly adjudicate claims. When insurance is only about profits and finding tools to further squeeze your existing clients no one benefits. Insurance companies do not need more ways to rate me, they just need to do the job they get paid to do.

I don't really understand the point your are trying to make? You state that "insurance is about pooling" then correctly observe the dollar amount they charge you is just some sort of risk rating assigned to the individual.

Also if you ever have a large claim paid, you'll quickly discover it isn't about pooling at all. Every insurer will simple decline to quote you or simply quote you some insane price. Even without accidents I once got a quote that was obviously a response of "please do not purchase this policy" when I tried to get basic liability insurance.

> This is a private company looking for profit. They want to raise your rates.

And this is the problem with insurance being mandatory. Their business model is to force everyone to buy an expensive subscription, and then increase costs every time everyone actually uses their service in order to recoup costs.

Yes, I am oversimplifying, but holy fuck do I hate insurance companies since I have never gotten one to pay out a claim without suing first.

> If I put a tracking device in my car today my rates would go up because I accelerate quickly and brake hard when conditions allow. That is not right.

If statistically other drivers who do that are more likely to, on average, result in a loss for the insurer, they are right to raise your rates. "Past Performance is no guarantee of future results"

With enough data, maybe it would support your assertion that you are, in fact, a very safe driver, by realizing that you only drive fast at certain times, in certain locations that are statistically lower risk.

> If statistically other drivers who do that are more likely to, on average, result in a loss for the insurer, they are right to raise your rates.

This argument could as well be applied regarding certain protected characteristics of the driver (such as race, gender, sexual orientation, etc).

This argument would only be valid if there was a causal relationship between the “protected characteristic” and the increased risk. If the relationship was not causal, then the insurer would be mispricing the risk and thereby leaving profit on the table.

> my rates would go up because I accelerate quickly and brake hard when conditions allow

All it takes is for you to misjudge the conditions one time (are you claiming to be infallible?), or for another road user to do something you were unable to anticipate, and suddenly this driving habit of yours does contribute to a higher risk of an incident that results in a claim. (Even if the incident still isn't considered to be your fault; your driving style reduces safety margins for everyone.)

You cannot know the limits of your vehicle and yourself, and operate safely within those limits if you do not know what those limits are. My driving style contributes to safer driving because I know when I might exceed the limits. As I mentioned, I adjust my driving style for conditions. If my driving was so egregious I would have a driving record.

Giving the insurance company more ways to judge me only enables them to charge me more, without my actual level of risk changing at all.

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