How Allstate’s auto insurance algorithm squeezes big spenders
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Re: How Allstate’s auto insurance algorithm squeezes big spenders
#2The insurance industry is notoriously afraid of transparency, and the state-based rate filing system makes it too easy to divide and conquer. This is an industry ripe for disruption via total transparency.
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#3The insurance industry is notoriously afraid of transparency, and the state-based rate filing system makes it too easy to divide and conquer. This is an industry ripe for disruption via total transparency.
“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 have the slightest idea what things will cost or what discount the insurance gets.
To have functioning markets both sides need information but with all these algorithms the information gets very one sided.
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#4How insurers determine your rate is generally available online [0]. That being said, some of the documents are almost unreadable.
I recently tried to figure out how I could optimize the amount of renter's insurance coverage I got from State Farm for the premium paid (I'm currently paying the minimum premium that they'll charge for any renter's insurance policy; $125/year) and their posted document was so dense and filled with jargon that I couldn't do it [1]. The document only contained the changes made since the previous approval. But I couldn't actually find the previous approval. So I was missing quite a few critical pages.
[0]: This is for NY: https://filingaccess.serff.com/sfa/home/NY
[1]: The overall filing package (https://filingaccess.serff.com/sfa/search/filingSummary.xhtm...). The rate document is named "NY HO 2019-05-01 Pages Changed.pdf"
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#5Interesting to see an article about this now. I work at a large insurer and we've been pissed off at AllState since they filed this garbage. It's made regulators hyper sensitive to this sort of price optimization even when we aren't even trying to do anything close to what they were doing.
I feel like the point of the article is a little bit undermined by the last section, though. A 71 year old having his rate increase "small amounts during the life of the policy" is pretty normal, and the fact that he was able to find a substantial discount elsewhere is evidence that the market is competitive.
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#6The insurance industry is notoriously afraid of transparency, and the state-based rate filing system makes it too easy to divide and conquer. This is an industry ripe for disruption via total transparency.
Insurers have to publish how they calculate rates and premiums. Every method and justification has to be approved by state regulators before they even enact them. It's one of the most transparent industries already.
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#7How insurers determine your rate is generally available online [0]. That being said, some of the documents are almost unreadable. I recently tried to figure out how I could optimize the amount of renter's insurance coverage I got from State Farm for the premium paid (I'm currently paying the minimum premium that they'll charge for any renter's insurance policy; $125/year) and their posted document was so dense and fi…
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.
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#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?
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#9How insurers determine your rate is generally available online [0]. That being said, some of the documents are almost unreadable. I recently tried to figure out how I could optimize the amount of renter's insurance coverage I got from State Farm for the premium paid (I'm currently paying the minimum premium that they'll charge for any renter's insurance policy; $125/year) and their posted document was so dense and fi…
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"
Re: How Allstate’s auto insurance algorithm squeezes big spenders
#10Earlier 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"
Technically most states allow drivers to post a surety bond as an alternative to purchasing a liability insurance policy. But in practice most people don't have enough cash available.