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How Allstate’s auto insurance algorithm squeezes big spenders

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

#31

Post by inetknght »

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've been with State Farm for over a decade in Texas. While I agree that I should have spent a hell of a lot more time shopping around, I'll also admit that I have _no idea_ how a lot of insurance works and frankly I don't care to spend that mental budget to learn to game it. My insurance rates are affordable to me and have only ever gone _down_ over the past decade. It even went down after having a collision and claiming about $6k in damages. The claims process was not a nightmare (contrast with stories from my parents' insurance companies) and was quite easy to deal with.

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

#33

Post by astura »

inetknght wrote: post #31
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've been with State Farm for over a decade in Texas. While I agree that I should have spent a hell of a lot more time shopping around, I'll also admit that I have _no idea_ how a lot of insurance works and frankly I don't care to spend that mental budget to learn to game it. My insurance rates are affordable to me and have only ever gone _down_ over the past decade. It even went down after having a collision and cla…

The GP is not suggesting that anyone "game" insurance rates, just that one should get a couple quotes after a several years to make sure you aren't being price gouged for being a loyal customer.

It's free, takes less than a half hour, and there's no obligation to purchase anything, it's just a quote.

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

#34

Post by Johnny555 »

I stopped using Allstate years ago -- I mentioned to my agent (this was back when it was still common to actually go see an agent in person to get insurance) that I had a chip in my windshield from a rock and I had to pay to fix it. He said "No, don't pay for it, just make a claim and we'll pay for it no deductable for glass fix since we want you to have a clear windshield".

So I made the claim. Then made 2 more claims through him that year (major road construction meant lots of debris on the highway I commuted on).

And then I got my premium notice and they increased my premium by 5X (something like $300 every 6 months to $1500) due my claim history -- I had no accidents, just $120 in window repair claims.

I immediately switched insurance companies and never went back. It was a good lesson for me -- don't use insurance if you can avoid it. So now I run $1000 decuctables when I can since I really don't want to make an insurance claim unless it's catastrophic.

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

#35

Post by RHSeeger »

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 have USAA and can't say enough good things about them. Whenever I call them, they're there to walk through whatever I need with me. The first thing they ask is if everyone is ok; it's trivial, but means something. In general, their rates are really good; it used to be that, when other companies called, you could tell them you have USAA and they're acknowledge they can't match the rates and hang up.

Admittedly, not everyone has access to USAA but, if you do, I highly recommend them.

Noting this because I've been using them for insurance for decades with no intention of switching.

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

#36

Post by Ididntdothis »

zamfi wrote: post #30
Ididntdothis wrote: post #3

Earlier quoted context omitted.

“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.

We live in the same house. She has Prime , I don’t.

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

#37

Post by bonestamp2 »

Johnny555 wrote: post #34

I stopped using Allstate years ago -- I mentioned to my agent (this was back when it was still common to actually go see an agent in person to get insurance) that I had a chip in my windshield from a rock and I had to pay to fix it. He said "No, don't pay for it, just make a claim and we'll pay for it no deductable for glass fix since we want you to have a clear windshield". So I made the claim. Then made 2 more clai…

We've also switched to higher deductibles since we have only ever made claims when it was a major accident. When I had a chip in my windshield, my agent didn't even know that they covered that "for free". I had to tell her, so I guess it's not widely know. It makes sense though -- it is in their best interest to pay for chip repair without any reason for the customer to avoid it (deductible) since it can avoid a costly windshield replacement if that chip enlarges or if there are greater injuries in an accident due to the weaker windshield.

I haven't seen any major rate increases on our car insurance, but our umbrella policy premiums went 4x this year (and we switched companies too). We're with Farmers for nearly everything now, but comparing rates with other agencies is on my to do list in case anyone has done the homework and has a recommendation.

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

#38

Post by onychomys »

briandear wrote: post #12
leereeves wrote: post #8

> One 36-year-old man from Prince George’s County, Md., who Allstate said in public records should have been paying $3,750 every six months, was instead being charged twice that, more than $7,500. This man was being charged over $15,000/year for auto insurance?

My airplane insurance costs less than that. $15k for auto insurance is insane.

Well, you're also much less likely to file an airplane claim than an automobile one. You're right that $15k is silly, but I'm not so sure it's the sort of silly you're implying here.

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

#39

Post by Doingmything123 »

ikeboy wrote: post #32

Why is the government in the business of disapproving prices in the first place?

The government should be in the business of fighting predatory pricing. Based on the other comments that people have a very hard time figuring out how much they would be paying(significant legal jargon obfuscation) it seems like people are being "forced"(as in no alternative) into contracts where they don't have a full understanding of what they are signing/paying. That seems pretty predatory to me

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

#40

Post by cortesoft »

dsfyu404ed wrote: post #9
pwinnski wrote: post #7

Earlier quoted context omitted.

The complexity seems to be the point. Many states allow complete opacity, and in those states, the companies operate completely opaquely. In states in which information is required to be made public, it's buried in overwhelming detail and hidden behind "change X from 0.04 to 0.007 from sub-reference 37N" language. That's deliberate.

They're selling a service that people are required to buy. It should be no surprise that the equilibrium reached is "be as consumer hostile as possible without violating the letter of the law enough to get told to stop"

There are lots of things we are 'required to buy' - food, shelter, etc. There is still competition, though, and we don't see price gouging in food, for example, just because people have to buy it.

If insurance is so overpriced, then why don't other companies enter the market?

I don't think insurance companies have crazy profit margins, so I don't think it is really price gouging going on. It might be shady competitive practices, to trick people into not realizing they are paying more, but I don't think it is because people are required to have insurance.

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