Allstate’s model seemed to determine how much a customer was willing to pay —or overpay—without defecting
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How Allstate’s auto insurance algorithm squeezes big spenders
41–50 of 167 posts
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#42The 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…
Another USAA member here. I haven't had to do an auto claim yet, besides simple windshields, but have had several property claims.
They have been great. In fact, right now USAA is in the subrogation process against the offending party for a claim on a bicycle.
I've been happy with their insurance products, their even better customer service, and have no plans of changing.
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#43Earlier quoted context omitted.
Probably has a DUI or 2. Also possible that they have a car worth a lot, but I think normally that goes through a specialty insurance company, or is just "self-insured" for collision coverage so the value of the car doesn't affect the premium.
Would All State still insure a person like that? I thought most well known companies would drop people with DUIs and leave them for lesser known "high risk insurance" companies.
Ideally, Allstate would access risk accurately and set their rates appropriately. For high-variance situations like this, over-indexing your loss ratio seems like a not-so-bad move.
Yes, you can get our insurance with your two DUI's but your price is 2x expected loss. Pretty solid odds if you're pretty confident in your pricing model.
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#44Why is the government in the business of disapproving prices in the first place?
would you want an insurance company to be able to price your policy on socially discriminatory characteristics without regulation to stop it? or possibly worse, without anyone even knowing?
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#45Why 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
Predatory pricing is pricing too low so competition is forced out. https://en.wikipedia.org/wiki/Predatory_pricing
That's not alleged here at all. "People have a very hard time figuring out how much they would be paying" no, what's being said is people are having a hard time reading the documents submitted to the regulator. If you want to know how much you'll pay, just get a quote from the insurer directly.
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#46Never had Allstate, but I had a similar experience with Amica. My auto premium increased every year despite no changes to my driving record. I called and the rep explained my policy was going up because of an accident from over 3 years ago.
I immediately dropped them, switched to another company and got a much lower rate. Added bonus, my premium drops every year or so.
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#47> 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?
There is a situation in relative poverty where you become so risk averse you end up paying outsized prices for things because you can't afford the risk of a change.
If this person lost his ability to drive based on not being able to get insurance, challenging the insane amount he is being charged is just too much risk.
Who knows what kind of events have occurred in his credit history, personal life, social media, or other reputations where he doesn't believe he can get insurance again if he applied.
It's a don't rock the boat mentality when you are at a disadvantage.
Reality is, big data makes life utterly dystopian for many people. It was foreseeable, predictable, and as a society we let it happen.
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#48Why is the government in the business of disapproving prices in the first place?
would you want an insurance company to be able to price your policy on socially discriminatory characteristics without regulation to stop it? or possibly worse, without anyone even knowing?
If those characteristics are higher risk, then they should be priced higher. And if they aren't higher risk, then a company using them to discriminate will be outcompeted by a company that is not.
You realize that, say, age is a protected class and yet an obvious risk factor, right? Do you think all ages should have the same rates for car insurance?
Mandating everyone pay the same price when their risks are different distorts incentives and makes us all worse off on average. Some may benefit in the short term by being subsidized by others, sure. Even if subsidies were socially desirable, price regulation is one of the least efficient ways to implement such subsidies. If the concern is that some people can't afford insurance because they're higher risk, then you can have subsidies targeted to them that pay for their insurance. That's far better than forcing an insurance company to take a loss on them.
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#49Earlier quoted context omitted.
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 competitiv…
(PDF Warning)
https://www.naic.org/documents/topic_insurance_industry_snap...
The United States' property and casualty industry's total profit margin on the whole was about nine tenths of a percent in 2018, which was a reversal from being net unprofitable in 2017.
There are about 2500 property and casualty insurance companies in the United States. Surely there's overestimation since (I'm guessing) the NAIC will count an insurance company in several states as several companies for the purposes of a count, but even if that's not the case, there are at least a hundred car insurance companies to choose from in any given state.
The purpose of an independent insurance agent (if everything goes right) is to help a customer select the best policy for their risk, and there are a ton of independent insurance agents, so one hopes that severe price gouging doesn't persist. However, not everyone uses an insurance agent - or the agent only writes with one business - so in practice, this kind of overpaying can occur to lots of people.
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#50The 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.
Similarly, I've been with GEICO for over a decade now for my car and homeowner's insurance. GEICO is just a homeowner's broker in New York, Liberty Mutual actually insures my house. I shop every year or two and I've never been able to find a better deal than I already have for comparable coverage, even directly quoting through Liberty Mutual. Regardless, my GIECO rates have been consistently going up these past few years, but it seems every other insurer is also raising rates for people like me (location, history, etc) every time I check.
I've never had to file a claim for my homeowner's insurance and I've never been at fault in a car crash, but I've heard some not so great stories about GEICO so hopefully I'll never have to find out.