How Allstate’s auto insurance algorithm squeezes big spenders • Hacker News Board

Re: How Allstate’s auto insurance algorithm squeezes big spenders

#21

Post by runako » Tue, Feb 25, 2020, 4:16 PM UTC

Loughla wrote: post #14

dboshardy wrote: post #6

Earlier quoted context omitted.

Insurers have to publish how they calculate rates and premiums. Every method and justification has to be approved by state regulators before they even enact them. It's one of the most transparent industries already.

I would argue that actuarial tables, equations, and formulas are not necessarily transparent for 95% of the population.

This is an astute summary of the practical effect of transparency in consumer-facing markets.

The information is there, therefore it is transparent. It's sort of on you if you are unwilling take it as a second job and/or hire a suite of professionals to help you understand.

Re: How Allstate’s auto insurance algorithm squeezes big spenders

#22

Post by toomuchtodo » Tue, Feb 25, 2020, 4:17 PM UTC

exhilaration wrote: post #15

The best thing you can do is shop for auto insurance every year or two. The longer you stay with a particular company the more likely they are to very slowly and carefully hit you with small rate increases until you're paying far more than their competitors will charge you. Insurance companies understand and exploit consumer behavior better than even the best marketers.

I want a product like policygenius.com, but instead of life insurance they have my entire insurance portfolio (auto, home, renters, umbrella, personal property) and constantly price shop for me automatically as a broker between me and every major insurer. I would also like such a product to be structured so that they can never be bought by Intuit or another incumbent, preferably in some sort of employee owned coop mutual company model (if Vanguard and USAA had an insurance broker child with a tech first demeanor).

Sidenote: I’ve been with State Farm for over 20 years, and my rates have only gone down.

Re: How Allstate’s auto insurance algorithm squeezes big spenders

#23

Post by Spooky23 » Tue, Feb 25, 2020, 4:18 PM UTC

bernardv wrote: post #2

The insurance industry is notoriously afraid of transparency, and the state-based rate filing system makes it too easy to divide and conquer. This is an industry ripe for disruption via total transparency.

The only reason we know about this is because its a regulated market, the regulator rejected the changes, and the data is available as a public filing.

The state based system allows for a diversity in regulatory regime that wouldn't happen at the federal level.

Re: How Allstate’s auto insurance algorithm squeezes big spenders

#24

Post by seibelj » Tue, Feb 25, 2020, 4:22 PM UTC

Anecdata but I had Allstate for at least 5 years, then they tripled my rates on renewal (Massachusetts). At the time I lived in a sketchier neighborhood of Boston, but I had no claims and a 3x increase was absurd. I switched to Geico and it was 2/3 as much as Allstate was before the raise, and it's been great since. Allstate is doing something weird.

Re: How Allstate’s auto insurance algorithm squeezes big spenders

#25

Post by Shivetya » Tue, Feb 25, 2020, 4:23 PM UTC

Allstate, a favorite of recent news in metro Atlanta as well. I did check with them recently when I did my yearly check on rates; they were one of the higher ones for home and auto combined. Fortunately my state (Georgia) rejected Allstate from doing what was in this article [2]

Local news station has had two recently articles about them. From finding methods to not pay damages at a cemetery caused by a car insured by them [0] to be called out for not paying bills when their insured drivers caused damage to other drivers [1]

The second story is more damning because it is law firms that end up court for suits call out Allstate for having the most issues, it also noted that ten years ago, the American Trial Lawyers Association named Allstate the worst insurance company in America. Google searches still return that note but it should be noted that lawyers tend to call out most insurance companies.

* Both have video components that may start on their own [0]https://www.wsbtv.com/news/local/2-investigates-car-crashes-...

[1] https://www.wsbtv.com/news/2-investigates/are-you-in-good-ha...

[2] https://www.consumerreports.org/media-room/press-releases/20...

Re: How Allstate’s auto insurance algorithm squeezes big spenders

#26

Post by solarkraft » Tue, Feb 25, 2020, 4:27 PM UTC

samsonasu wrote: post #16

bernardv wrote: post #2

The insurance industry is notoriously afraid of transparency, and the state-based rate filing system makes it too easy to divide and conquer. This is an industry ripe for disruption via total transparency.

I dont think average folks care about transparency, they mostly care about the bottom line. I would bet that if you offered a black-box $50/month with no explanation and a transparent, easily understood $60/month people would choose the cheaper option 9 times out of 9.

I am pretty young and have never bought any insurance, but am currently shopping for some.

Since I hear relatively many "insurer didn't pay" stories (often because of a weird detail), I don't have much trust in insurance and do place a lot of value on actually understanding what will be covered.

I'm still a fan of a good deal, but confidence in reliability is a pretty important part of the features, no?

Re: How Allstate’s auto insurance algorithm squeezes big spenders

#27

Post by CapmCrackaWaka » Tue, Feb 25, 2020, 4:30 PM UTC

kevindong wrote: post #4

How insurers determine your rate is generally available online [0]. That being said, some of the documents are almost unreadable. I recently tried to figure out how I could optimize the amount of renter's insurance coverage I got from State Farm for the premium paid (I'm currently paying the minimum premium that they'll charge for any renter's insurance policy; $125/year) and their posted document was so dense and fi…

I used to work in auto insurance pricing. The algorithms are relatively simple, but the filing is made as obfuscated as possible to fool the regulators, competitors, and the general public. There are no black box models or anything, it's usually just multiplicative factors, but good luck finding the factors and definitions.

Re: How Allstate’s auto insurance algorithm squeezes big spenders

#28

Post by unlinked_dll » Tue, Feb 25, 2020, 4:33 PM UTC

exhilaration wrote: post #15

The best thing you can do is shop for auto insurance every year or two. The longer you stay with a particular company the more likely they are to very slowly and carefully hit you with small rate increases until you're paying far more than their competitors will charge you. Insurance companies understand and exploit consumer behavior better than even the best marketers.

State Farm has only ever reduced my rate. They do it about once a year. I have shopped around and changing policies would cost be upwards of $50/month more than I currently pay.

Granted the best thing you can do for low auto insurance rates is to barely drive. Personally I drive less than 5k miles a year, and my rate reflects that.

Re: How Allstate’s auto insurance algorithm squeezes big spenders

#29

Post by wil421 » Tue, Feb 25, 2020, 4:35 PM UTC

Shivetya wrote: post #25

Allstate, a favorite of recent news in metro Atlanta as well. I did check with them recently when I did my yearly check on rates; they were one of the higher ones for home and auto combined. Fortunately my state (Georgia) rejected Allstate from doing what was in this article [2] Local news station has had two recently articles about them. From finding methods to not pay damages at a cemetery caused by a car insured b…

I’m in Metro Atlanta and my father in law is a general contractor. His roofers and plumbers will not do business with people filing All State claims. The roofer said he used to but All State kept denying reimbursements or repayment of changes they already approved.

My father and his whole neighborhood had storm damage. All State approved all the work but still took 6+ months to pay out after the work was finished.

Re: How Allstate’s auto insurance algorithm squeezes big spenders

#30

Post by zamfi » Tue, Feb 25, 2020, 4:45 PM UTC

Ididntdothis wrote: post #3

bernardv wrote: post #2

The insurance industry is notoriously afraid of transparency, and the state-based rate filing system makes it too easy to divide and conquer. This is an industry ripe for disruption via total transparency.

“This is an industry ripe for disruption via total transparency.” A lot of industries are ripe for this kind of disruption. With availability of more and more data there is a growing asymmetry between companies and consumers. Just yesterday I looked up something on Amazon. Sent the link to my girlfriend. She saw a price that was $10 more. Same often happens with flights. And in US healthcare the patient doesn’t even…

> Just yesterday I looked up something on Amazon. Sent the link to my girlfriend. She saw a price that was $10 more.

Out of curiosity, are you and your girlfriend in the same geographic market & served by the same amazon warehouse? And are you both prime members?

I wonder if this is personalized to the individual or based on other factors.