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Want to be an actuary? Odds are, you’ll fail the test

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Re: Want to be an actuary? Odds are, you’ll fail the test

#321

Post by whatshisface »

jjnoakes wrote: post #319
whatshisface wrote: post #243

Earlier quoted context omitted.

The only way to convert "has a DUI" into a specific rate increase is through risk analysis of everybody with DUIs.

Why is that the only way? Seems to me you could just raise rates after someone caused actual damage instead.

By how much? Logically, the fair amount to raise rates would be the amount that compensated for their increased risk of doing it again. There you are, doing a risk analysis.

(If you had them directly pay for the damage they caused, that wouldn't be insurance, that would be a middle man for restitution.)

Re: Want to be an actuary? Odds are, you’ll fail the test

#322

Post by dragonwriter »

romwell wrote: post #59
asdfasgasdgasdg wrote: post #54

Earlier quoted context omitted.

While corruption may have been the source of this particular business, the fact that insurance is required by law is a good thing. The counterfactual involves a bunch of uninsured judgement proof drivers clogging the road and ruining everyone else's day/life. The problem is already bad enough now when it is illegal to do.

Hot take: if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees. Otherwise, it's just an income-generating scheme for private parties. Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court . They don't have to follow that the police r…

> if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees.

It's not, even in theory, in most places, though. It's just a convenient option to a liability bond that most drivers choose.

> Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court. They don't have to follow that the police report says regarding whose fault it is.

Well, yeah. It's liability insurance. It has to pay when a legal liability is established against the driver. That is, exactly when the driver would have to pay in the absence of insurance.

Determining legal liability is what we have courts for, not police. The cops doing the courts’ jobs is a phenomenally bad idea.

Re: Want to be an actuary? Odds are, you’ll fail the test

#323

Post by nradov »

namdnay wrote: post #273
seibelj wrote: post #258

Earlier quoted context omitted.

This is the same model of all licenses, which is inherited from the guild system common throughout all of human history (the government (monarchs, oligarchies, democracies) protect favored industries from competition). I put them on a spectrum: - Licenses that anyone can obtain by showing the requisite skills. This is the least nefarious, and the clearest example would be driver's licenses. In a perfect world anyone…

> Licenses that anyone can get, but are purely graded on a curve in order to protect existing members. Finally we get to the actuarial licenses! Similar licenses would be Michelin star restaurants and wine sommeliers. Only a very small community appreciates these licenses, but the value to those that have them is high via the artificial scarcity. In order to keep them fair they offer the test(s) to anyone, but grade…

A Michelin star rating is not a license. It has no legal force. It's simply a restaurant review, like you can read in any newspaper. Some consumers choose to trust Michelin reviews more than other sources.

Re: Want to be an actuary? Odds are, you’ll fail the test

#324

Post by nradov »

toomuchtodo wrote: post #94
fn-mote wrote: post #81

Earlier quoted context omitted.

> it should be provided by the state and paid for with taxes / annual registration fees The free market is required to accurately price the risk for each driver. A 45 year old female driver with no infractions is much less risk than an 18 year old male with a DUI, so the former should pay less in premiums. The current system is doing that. I do not see how a state-provided solution would come up with "accurate" prici…

A government entity could perform this, no free market required. See residential flood insurance for a government based risk rating example.

Government provided residential flood insurance is a horrible example of moral hazard and should be eliminated. Taxpayers shouldn't have to subsidize investors who choose to purchase property in flood zones.

Re: Want to be an actuary? Odds are, you’ll fail the test

#325

Post by mleonhard »

civilized wrote: post #292
mleonhard wrote: post #233

Earlier quoted context omitted.

I tried to buy decreasing term life insurance, where the benefit decreases continuously over 20 years, matching the needs of my family. I consulted with several agents and none of them could sell it to me. The best they could do was to divide the term into three time periods with different benefit amounts. One agent told me that most customers drop their policy after a few years. The companies earn most of their inco…

There's a startup that will do this but I don't know if you'd want a policy with a startup.

Please share a link. And in the future, try to share links or at least names of things you tell people about. If you can't find the link or name, then say so. I think saying only "the thing you want exists" is a little rude.

Re: Want to be an actuary? Odds are, you’ll fail the test

#326

Post by mleonhard »

lotsofpulp wrote: post #268
mleonhard wrote: post #233

Earlier quoted context omitted.

I tried to buy decreasing term life insurance, where the benefit decreases continuously over 20 years, matching the needs of my family. I consulted with several agents and none of them could sell it to me. The best they could do was to divide the term into three time periods with different benefit amounts. One agent told me that most customers drop their policy after a few years. The companies earn most of their inco…

I applied for term life insurance at 3 or 4 life insurance companies, and they all allowed you to reduce the benefit amount a few times over the term. Not every year, but they said it was no problem if you wanted to halve the benefit halfway through or even a second time after that (and they would lower the premiums commensurately of course). I have Principal and Protective in the US.

Your comment is essentially "me too". That's not interesting.

Re: Want to be an actuary? Odds are, you’ll fail the test

#327

Post by civilized »

mleonhard wrote: post #325
civilized wrote: post #292

Earlier quoted context omitted.

There's a startup that will do this but I don't know if you'd want a policy with a startup.

Please share a link. And in the future, try to share links or at least names of things you tell people about. If you can't find the link or name, then say so. I think saying only "the thing you want exists" is a little rude.

No thanks, not after that display of attitude.

Scolding people for not giving you more than they already gave you for free is a behavior that will never get you what you want.

Update: eh, I'm in a good mood today so I'll tell you the name, it's Ladder. No link though. You may Google it as penance for being annoying.

Re: Want to be an actuary? Odds are, you’ll fail the test

#328

Post by lotsofpulp »

mleonhard wrote: post #326
lotsofpulp wrote: post #268

Earlier quoted context omitted.

I applied for term life insurance at 3 or 4 life insurance companies, and they all allowed you to reduce the benefit amount a few times over the term. Not every year, but they said it was no problem if you wanted to halve the benefit halfway through or even a second time after that (and they would lower the premiums commensurately of course). I have Principal and Protective in the US.

Your comment is essentially "me too". That's not interesting.

You are right, I was too quick to interpret the first time and thought you wrote that the best they could do is sell you three different policies that you cancel whenever you want to drop that benefit amount.

Re: Want to be an actuary? Odds are, you’ll fail the test

#329

Post by jjnoakes »

whatshisface wrote: post #321
jjnoakes wrote: post #319

Earlier quoted context omitted.

Why is that the only way? Seems to me you could just raise rates after someone caused actual damage instead.

By how much? Logically, the fair amount to raise rates would be the amount that compensated for their increased risk of doing it again. There you are, doing a risk analysis. (If you had them directly pay for the damage they caused, that wouldn't be insurance, that would be a middle man for restitution.)

By some amount proportional to the damage caused, of course. The more times you cause damage, and the higher the damages, the higher your rates go over time.

I think my point is pretty clear without me coming up with a precise formula: instead of predicting rates, just adjust them based on history instead. After all, someone likely to cause repeated damage in the future is also likely to have caused it in the past.

The only major difference between the two approaches is that mine doesn't require someone to make predictions - which might be biased - in exchange for mine maybe under-charging someone with no negative history who is about to cause a huge amount of damage and then stop paying into the system (death, etc). But in those (rare?) cases, the fact that everyone is part of the system means that the single rare loss is amortized nicely and without bias.

Re: Want to be an actuary? Odds are, you’ll fail the test

#330

Post by romwell »

gruez wrote: post #313
whatshisface wrote: post #247

Earlier quoted context omitted.

If they said "yes" to that they wouldn't be the first in history with that answer.

And we all know how well that worked out.

You mean, it turned a backwater decaying agrarian empire into a world superpower, twice (Russia and China)?

Side note: when the USSR held a referendum on whether it should be dissolved, most people voted to keep it (77% yes, 23% no) [1]. Things by far were not rosy in the late 80s (when a quarter of the nation votes for dissolution, things aren't great), but they weren't 30s either.

That's, of course assuming you mean the USSR/China and ignore all the other welfare states in Europe, as well as programs like foodstamps in the US.

[1] https://en.wikipedia.org/wiki/1991_Soviet_Union_referendum

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