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

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

#81

Post by rexf » Tue, Feb 25, 2020, 7:26 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.

Shopping for auto insurance has been completely useless for me. When I compared across multiple insurance companies, I was able to pick the "lowest cost" provider. However, when I went to sign up, the price offered was completely different from what I saw shopping on their website.

Also, I recently tried to compare my current auto policy with a different insurance provider. The new insurance agent told me my rates would go up with them, so I obviously declined to change my auto insurance.

I understand that periodically shopping for better rates is the logical thing to do, but in my auto insurance shopping experience, the numbers all seem arbitrary so shopping is not useful.

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

#82

Post by ikeboy » Tue, Feb 25, 2020, 7:35 PM UTC

Edman274 wrote: post #75

ikeboy wrote: post #32

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

Almost all state governments made it so that you can't drive a car unless you have insurance. The reason they did this is so that if you hit someone and cause physical injury to them or to their property, it's possible to pay them for the damage you did to them. The government has decided that it is a good idea to make sure that people generally have a way of getting money from people that have caused accidents. We'v…

1. I'm perfectly fine with mandatory liability insurance. Requiring assurance that someone can pay for any damage they do before granting them access to our roads is fine.

2. "state governments have also determined that it's in our collective best interest to not allow for bad behavior by insurers in overcharging drivers for things not directly related to risk." This doesn't follow. You need to argue for a market failure of some sort to justify regulation. Seatbelts are mandatory, but it doesn't follow from there that the government must regulate the pricing structure of seatbelt manufacturers.

3. "The reason for this is that making car insurance generally unaffordable to classes of people tends to exacerbate divisions in society, at least in the United States." This is properly handled with subsidies, not mandates, as I already mentioned in other comments.

4. "Finally, it cannot be taken for granted that companies always discriminate fairly when there are no laws to prevent them from not doing so."

We don't need to take that for granted. The only relevant question is whether there is competition. If there's a monopoly, perhaps created by onerous government regulations, then there might not be sufficient competition. Again, you need to argue for a market failure, which you have not.

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

#83

Post by Marsymars » Tue, Feb 25, 2020, 7:38 PM UTC

rexf wrote: post #81

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.

Shopping for auto insurance has been completely useless for me. When I compared across multiple insurance companies, I was able to pick the "lowest cost" provider. However, when I went to sign up, the price offered was completely different from what I saw shopping on their website. Also, I recently tried to compare my current auto policy with a different insurance provider. The new insurance agent told me my rates wo…

> However, when I went to sign up, the price offered was completely different from what I saw shopping on their website.

In my experience, the websites use an entirely different algorithm than whatever phone agents have access to.

I don't bother going through insurance websites' lead generation workflows, I just call a handful and get quotes on the phone from them.

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

#84

Post by mcherm » Tue, Feb 25, 2020, 7:42 PM UTC

zrobotics wrote: post #79

wpietri wrote: post #61

Earlier quoted context omitted.

I think high deductibles are an excellent choice for those of us who do well financially. I do that myself. But I should note that 40% of Americans can't handle sudden a $400 expense, so it doesn't work well for everybody: https://www.cbsnews.com/news/nearly-40-of-americans-cant-cov...

But for people on lower incomes, why would they be better served with low-deductible (and expensive) policies? If they can't afford a sudden $400 expense, why is spending additional money each month for a more comprehensive policy a good idea? Remember, auto insurance doesn't cover mechanical failures. A perfectly valid option is to have a higher deductible, and use offset that with putting the funds that would have…

> And for people who make little enough money where saving that money every month isn't a viable option, they really have no business buying any sort of comprehensive auto insurance anyway. Liability only insurance is far cheaper, and provides all the protection necessary to prevent a car accident from being financially world-ending.

You might want to consider this from a different perspective.

For the well-paid like myself who has invested well and has substantial savings, a liability insurance claim that could potentially cost several hundred thousand dollars is "financially world-ending", while having to pay for repairs on my car after an accident is not.

But for someone with no savings, being unable to drive their car because they cannot afford to pay for repairs after an accident may mean losing their job (public transportation isn't so great where they live) and definitely qualifies as "financially world-ending" for them. Whereas several hundred thousand dollars of liability is actually LESS of a threat -- the lawyers can quickly discover that they don't own anything worth collecting and may not even go after their assets, but even if they do, at worst it empties their bank account (which we presumed has less than 400 dollars in it).

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

#85

Post by somurzakov » Tue, Feb 25, 2020, 7:42 PM UTC

is there an insurer with better rates than geico for young and safe driver with zero accident record and perhaps 1 or 2 speeding tickets ? [in the southeast region]

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

#86

Post by jmcqk6 » Tue, Feb 25, 2020, 7:45 PM UTC

ikeboy wrote: post #82

Edman274 wrote: post #75

Earlier quoted context omitted.

Almost all state governments made it so that you can't drive a car unless you have insurance. The reason they did this is so that if you hit someone and cause physical injury to them or to their property, it's possible to pay them for the damage you did to them. The government has decided that it is a good idea to make sure that people generally have a way of getting money from people that have caused accidents. We'v…

1. I'm perfectly fine with mandatory liability insurance. Requiring assurance that someone can pay for any damage they do before granting them access to our roads is fine. 2. "state governments have also determined that it's in our collective best interest to not allow for bad behavior by insurers in overcharging drivers for things not directly related to risk." This doesn't follow. You need to argue for a market fai…

You're acting like the parent you're responding to was making an argument for something, instead of describing the current reality.

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

#87

Post by davchana » Tue, Feb 25, 2020, 7:45 PM UTC

cortesoft wrote: post #40

dsfyu404ed wrote: post #9

Earlier 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…

Well I am new to US, had to buy renter's insurance; Geico and everybody offered for $20+ per month; but Lemonade quoted about $6. Almost similar coverage. Now for Car, Geico was most economical $86; Lemonade does not offer, Dealer said $125, Others were like $100-120.

I think as more startup companies enter insurance, prices are going to be better & more competitive.

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

#88

Post by mbreedlove » Tue, Feb 25, 2020, 7:45 PM UTC

somurzakov wrote: post #85

is there an insurer with better rates than geico for young and safe driver with zero accident record and perhaps 1 or 2 speeding tickets ? [in the southeast region]

I found Progressive to be half the cost of Geico.

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

#89

Post by ikeboy » Tue, Feb 25, 2020, 7:50 PM UTC

jmcqk6 wrote: post #86

ikeboy wrote: post #82

Earlier quoted context omitted.

1. I'm perfectly fine with mandatory liability insurance. Requiring assurance that someone can pay for any damage they do before granting them access to our roads is fine. 2. "state governments have also determined that it's in our collective best interest to not allow for bad behavior by insurers in overcharging drivers for things not directly related to risk." This doesn't follow. You need to argue for a market fai…

You're acting like the parent you're responding to was making an argument for something, instead of describing the current reality.

Perhaps. My "why are states in that business" was meant as a moral question, not a factual question.

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

#90

Post by lotsofpulp » Tue, Feb 25, 2020, 8:00 PM UTC

noisem4ker wrote: post #74

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.

In Italy, auto insurance contracts are limited by law to one year in length, so that people are encouraged to re-evaluate their position and get new quotes more often, promoting competition.

I've never seen one longer than 6 months in the US. And I don't even think it's a contract for 6 months, you can cancel anytime and get a refund for the months you don't have it.