Home insurers are dropping customers based on aerial images • Hacker News Board

Re: Home insurers are dropping customers based on aerial images

#71

Post by pishpash » Sat, Apr 06, 2024, 4:35 PM UTC

mb7733 wrote: post #6

malfist wrote: post #4

If insurance is individually priced to this degree, what's the point of insurance?

Why would insurance being individually priced negate its value? The benefit of insurance is the pooling of the risk. The more individually it is priced, the more efficiently it works. (Not that I'm a fan of insurers spying on their customers from the sky...)

The insurance paradox. If you can price every risk precisely, meaning the variance on your prediction is zero, there's no point to insurance because it would be the same as a savings account.

There's no pooling of risk at all.

Re: Home insurers are dropping customers based on aerial images

#72

Post by gmd63 » Sat, Apr 06, 2024, 4:39 PM UTC

kjkjadksj wrote: post #31

gmd63 wrote: post #21

Earlier quoted context omitted.

Insurance incentives would drive them to want to predict as accurately as possible who is going to cost them money, and then deny them coverage. They make money from selling to people who are afraid of a calamity but likely won't experience one.

Why are they in the business of denying coverage? They are insurance. They estimate their payouts from the entire pool and price your premiums accordingly. Paying out should therefore not really affect their bottom line if they price the premiums appropriately.

Home insurance companies are leaving Florida because it's not profitable to operate in an area with so much vulnerability to hurricane damage.

Also, the only thing stopping medical insurers from denying coverage or increasing prices for people with pre-existing conditions is the Affordable Care Act.

Re: Home insurers are dropping customers based on aerial images

#73

Post by pishpash » Sat, Apr 06, 2024, 4:40 PM UTC

rrix2 wrote: post #35

mb7733 wrote: post #27

Earlier quoted context omitted.

Accurately pricing insurance doesn't reduce the size of the pool. When you buy insurance, you aren't just pooling risk with other customers with the exact same risk profile as yourself. You're pooling with all customers of the company. (Plus all customers of any reinsurance company, etc.)

It's not being individually priced, people at higher risks are being forced out of their insurance options leaving only low-risk individuals priced in! Non-renewal isn't just some rate adjustment

It is just a very high rate if they could charge it, but that's the point: when the uncertainty is nil, the premium will always be the replacement cost when the replacement is about to happen, so that there's no insurance.

Put another way, if the insurance company isn't taking on any risk then you are.

Re: Home insurers are dropping customers based on aerial images

#74

Post by syndicatedjelly » Sat, Apr 06, 2024, 4:42 PM UTC

throwaway74432 wrote: post #19

Related, my vehicle insurer keeps jacking up the rates. I've never been in an accident or had a ticket, and I drive 2000 miles per year. But every year up up up. Then they offer I install a tracking device on my car to get my rates back down to a reasonable amount. There seems to be a pattern of insurers wanting to know everything about everyone, and using irrationally higher rates to coerce consent. And I have to pa…

Maybe the rise in the prices of new cars, used parts, and labor has an impact.

Re: Home insurers are dropping customers based on aerial images

#75

Post by ametrau » Sat, Apr 06, 2024, 4:43 PM UTC

VHRanger wrote: post #65

landedgentry wrote: post #17

I'm less concerned about the spying and more concerned about insurance companies arbitrarily non-renewing policies with no recourse for the consumer. Insurance is heavily regulated for good reason, and insurance should be a source of stability instead of anxiety.

Thats exactly the problem with insurance. If I have any sort of risk mitigation (file backup, fire alarms, spare tire, a generator, whatever) I can test that it works periodically. So I know I'm actually safe for the event. For insurance, you can't know what bullshit they'll come up with to deny a claim when the time comes for it. You're left with having paid for the insurance all that time for nothing! Much better t…

Well technically you were paying for their obligation to pay for you. Which is a real thing of value.

Re: Home insurers are dropping customers based on aerial images

#76

Post by theptip » Sat, Apr 06, 2024, 4:45 PM UTC

kjkjadksj wrote: post #31

gmd63 wrote: post #21

Earlier quoted context omitted.

Insurance incentives would drive them to want to predict as accurately as possible who is going to cost them money, and then deny them coverage. They make money from selling to people who are afraid of a calamity but likely won't experience one.

Why are they in the business of denying coverage? They are insurance. They estimate their payouts from the entire pool and price your premiums accordingly. Paying out should therefore not really affect their bottom line if they price the premiums appropriately.

Tail risk / volatility.

Re: Home insurers are dropping customers based on aerial images

#77

Post by syndicatedjelly » Sat, Apr 06, 2024, 4:47 PM UTC

op00to wrote: post #25

egeozcan wrote: post #11

Earlier quoted context omitted.

After reading that, my mind is generating weird scenarios in which undeclared trampolines are causing tragedies. Trampolines can indeed cause accidents but is that big of a risk to have one? That feels so out of place it's beyond comical.

Yes. Growing up I saw my friend’s foot pointed the wrong direction after a “double bounce” caught his foot in the gap between the trampoline surface and the supports. We were careful kids.

Idk how any of us survived the 90s with trampolines in constant use! We would jump off them into pools, jump onto them from the roof, double bounce each other half a dozen feet in the air. I even mastered the “art” of jumping off of it and landing on the ground (from 6 feet up), rolling and popping back up.

Re: Home insurers are dropping customers based on aerial images

#78

Post by pishpash » Sat, Apr 06, 2024, 4:56 PM UTC

brogrammernot wrote: post #69

landedgentry wrote: post #17

I'm less concerned about the spying and more concerned about insurance companies arbitrarily non-renewing policies with no recourse for the consumer. Insurance is heavily regulated for good reason, and insurance should be a source of stability instead of anxiety.

Alright, I spent years working and building 0-1 insurance products. Let me peel back some stuff that’s been happening behind the scenes. Some officials are elected and some are appointed which all depends on the state. Appointed officials are usually more reasonable and elected are not because higher rates = mad voters = re-election chances lower. For a long time, insurers have struggled to get sufficient rate change…

[flagged]

Re: Home insurers are dropping customers based on aerial images

#79

Post by [deleted] » Sat, Apr 06, 2024, 5:07 PM UTC

pishpash wrote: post #78

brogrammernot wrote: post #69

Earlier quoted context omitted.

Alright, I spent years working and building 0-1 insurance products. Let me peel back some stuff that’s been happening behind the scenes. Some officials are elected and some are appointed which all depends on the state. Appointed officials are usually more reasonable and elected are not because higher rates = mad voters = re-election chances lower. For a long time, insurers have struggled to get sufficient rate change…

[flagged]

[deleted]

Re: Home insurers are dropping customers based on aerial images

#80

Post by dmoy » Sat, Apr 06, 2024, 5:08 PM UTC

mindslight wrote: post #46

dmoy wrote: post #36

Earlier quoted context omitted.

You don't have to have home insurance by law, at least not in the US If you don't own your house outright, the bank that owns part of it may require insurance as a prerequisite for loaning you money.

You're right about the ultimate legal situation, but there's two problems I see with dropping insurance on a paid off home. The first is that the companies, seemingly operating in lock step, will heavily penalize you if you change your mind and want to go back to insuring. The second is the liability component, whereby simply owning a piece of real estate means you're a juicy target to be found jointly liable for a w…

> The first... The second

Sure, but neither of those are due to it being required by law.

In the first case there I don't know what's happening, I guess maybe insurance companies have figured out that people dropping insurance and then picking it back up correlates with increased claims due to stuff that happened during the interim.

In the second case there, you can definitely get liability insurance separately from homeowners. And it's wayyyy cheaper. Or, live in a country that isn't as crazy litigious as e.g. USA.

But again, neither is a legal requirement, which is all I was getting at initially given the top comment in this chain.