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Home insurers are dropping customers based on aerial images

wsj.com

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Re: Home insurers are dropping customers based on aerial images

#121

Post by rufus_foreman »

jjtheblunt wrote: post #109
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…

I’m not seeing you motivate or justify the rate increases.

I'm seeing it: "This was with actual data of losses increasing due to supply chain disruption of auto parts, labor increases and many more things."

Re: Home insurers are dropping customers based on aerial images

#122

Post by tptacek »

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]

If losses reach the point where it's irrational to invest in insurance businesses versus other competing business propositions, insurers exit the market, and the boo-hoo is on you. You can moralize your way out of cuts in profits, but you can't moralize your way out of sustained losses.

Re: Home insurers are dropping customers based on aerial images

#123

Post by jeffbee »

VHRanger wrote: post #66
consultutah wrote: post #3

Vexcel doesn’t use drones. They use manned aircraft. Drones are almost never used for insurance. There are a couple of companies that do, but the costs are still too high for it to make sense.

I don't think the problem people have with this is the type of air vehicle used to take the picture

Surprisingly, it seems to me that you are wrong. People will absolutely lose their minds whenever they hear about an unmanned aircraft, but never talk about manned aircraft. There have been tons of news articles about "police drones" an other kinds of scaremongering, that never seem to note that the cops using an airplane to follow you in the dark has been a thing for decades. The only new thing is the pilot does not necessarily need to sit in the aircraft.

Re: Home insurers are dropping customers based on aerial images

#124

Post by brogrammernot »

myself248 wrote: post #114
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…

I thought risk pooling was the point?

It is through reinsurance mechanisms and the way you build the portfolio.

If you can’t use predictive attributes, many not allowed in California, you’re not going to get reinsurance interest because you can’t really balance the risk across different risk types for drivers.

So the end result is the customer pays more, despite their driving record being clean, because that’s the only way to manage through the risk.

Re: Home insurers are dropping customers based on aerial images

#125

Post by rufus_foreman »

bluejekyll wrote: post #50
dmoy wrote: post #39

Earlier quoted context omitted.

Do you live in CA? In recent years that's the majority of arbitrary cancellations I've heard about - companies pulling entirely out of CA.

Similar reports are coming out of Florida. Generally, it seems the industry is pulling away from higher risk to climate change issues from larger storms or fire risk.

That's not the issue in Florida. The issue in Florida is that "although Florida only accounts for 9 percent of the country’s home insurance claims, it is home to 79 percent of the country’s home insurance lawsuits".

That's from https://www.bankrate.com/insurance/homeowners-insurance/flor..., which explains how the roofing scams work in that state. The legislature is working on it.

Re: Home insurers are dropping customers based on aerial images

#126

Post by overstay8930 »

sircastor wrote: post #12

I'm going to assume that nobody's insurance premiums or deductibles are going down from this data. No analysis is making the insurer say "Oh, that roof is in much better condition despite its age." Insurance feels like the biggest scam in the history of the world. You are legally obligated to pay us for nothing, most of the time.

> No analysis is making the insurer say "Oh, that roof is in much better condition despite its age."

That’s exactly what they do. There are people getting paid millions of dollars to create software that does this.

Do you know how much money an insurance company can print if they can undercut the competition by selling a bunch of policies to people who won’t file a claim?

People pick insurance based on price, and if someone is selling you a cheaper policy because they know your roof is better, you’re going to buy it from them.

They win because you’ll pay a premium without filing a claim, and you win because you can have a cheaper policy. That’s how it works in the real world.

Re: Home insurers are dropping customers based on aerial images

#127

Post by toast0 »

j45 wrote: post #88
danielmarkbruce wrote: post #58

Earlier quoted context omitted.

No one, including companies, should not be forced into contracts they don't want to enter into. In practice, you are going to find they are never arbitrarily doing it. They are doing it because the price no longer covers the cost of providing the insurance. Just like when I decide the price of X isn't worth it anymore, I stop doing the transaction. The reasonable response would be to increase the price, but in some s…

Except when those companies have lobbied to create laws to make the use of their industry mandatory.

Car insurance isn't mandatory; proof of financial responsibility is. In California, you can get a compliant insurance policy, deposit $35k with the DMV, setup a compliant $35k bond, or a self-insurance certificate which requires a larger deposit and is really for commercial motor vehicle carriers. I don't think it's unreasonable to require means to pay for damages when operating a motor vehicle; it doesn't take much to cause damages well in excess of California's deposit amount; washington state requires $60k.

For home insurance, usually it's a mortgage requirement, which is not by law. In condominiums, the community may require it of individual owners, and then it's not really law either.

Re: Home insurers are dropping customers based on aerial images

#128

Post by twoodfin »

jcims wrote: post #23
mb7733 wrote: post #6

Earlier quoted context omitted.

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...)

Because at the limit, the size of the pool is one...you.

Exactly. And insurance is still a good deal even if the expected value for that one member pool is negative. In fact, insurance as a market doesn’t work unless the average customer loses out. This is not a bad thing!

Re: Home insurers are dropping customers based on aerial images

#129

Post by ska »

myself248 wrote: post #114
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…

I thought risk pooling was the point?

Risk pooling is fundamental to insurance, but not all pools are the same.

The observation is that if you aren't able to discriminate at all or subdivide the pools, the only response is to up the average rate to cover the aggregate risk as best you can estimate it. This gets tricky if your ability to change rates is constrained, also.

These things are always in fundamental tension, and also in tension with privacy. It's not an easy problem.

Re: Home insurers are dropping customers based on aerial images

#130

Post by lokar »

mb7733 wrote: post #18
sircastor wrote: post #12

I'm going to assume that nobody's insurance premiums or deductibles are going down from this data. No analysis is making the insurer say "Oh, that roof is in much better condition despite its age." Insurance feels like the biggest scam in the history of the world. You are legally obligated to pay us for nothing, most of the time.

This doesn't make sense. If an insurance company wanted to charge higher premiums, they would just do so. They wouldn't need to spy on customers. The point of them trying to quantify risk as accurately as possible is to be able to extract profit while also offering competitive rates. It's the same as with any other company. They try and operate as efficiently as possible (ie. reduce costs) to try and make more profit…

My insurance company sent an inspector to check the house. As a result he adjusted some details of the policy that reduced the rate slightly.
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