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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

#501

Post by skissane »

Eisenstein wrote: post #490
skissane wrote: post #474

Earlier quoted context omitted.

> 4. The health insurance that fully covered their injury, looks at the medical records and finds that the injury occurred on another property and calls the people involved and finds out about the unlit path In Australia, if you are seriously injured, you will be sent to a public hospital, where the government will fit the bill for your treatment. If it is a workplace injury or a motor vehicle accident, they might se…

> It isn't just about lawsuits, it is also about damages payouts. In the US, there is a very broad constitutional right to a jury trial, which extends to civil lawsuits; and (in many cases) the law entrusts the jury, not just with deciding whether the plaintiff has factually proven their case, but also with awarding damages. The big damages are punitive damages, not damages for compensation. Since we have rather lax…

Yes, it is the punitive damages which are really astronomically insane. But even merely compensatory damages in the US can be extremely high by the standards of other countries.

For example, in the 2014 Florida case Cynthia Robinson v. R.J. Reynolds Tobacco Company, et al, the jury awarded US$23.6 billion in punitive damages as well as US$16.9 million in compensatory damages, for the death of the plaintiff's husband, a smoker who died from lung cancer at the age of 36. I'm sceptical any Australian judge would ever award US$16.9 million (at current exchange rates, AU$25.7 million) compensatory damages for a single person's death. The trial judge cut back the astronomical punitive damages award, but left the compensatory award intact. In the end, the plaintiff never got any of that money (the appeals court ordered a retrial, on grounds unrelated to the damages, and the defendant prevailed at the second trial). Still, I think it goes to show, it is not just high punitive damages, high compensatory damages is an issue too.

Re: Home insurers are dropping customers based on aerial images

#502

Post by Kalium »

sarchertech wrote: post #318
tptacek wrote: post #294

I don't really understand the privacy concern here. To wit: insurers can demand actual inspection of your home when making underwriting decisions. The condition of your house is very much their business. Why is an aerial photograph of your roof, which everybody in the world already has on Google Maps, such a big deal?

It’s an issue of scale. Similar to police tracking phones. Police have always been able to assign an officer to follow a suspect, but it’s expensive and therefore rarely done. If insurance companies can cheaply inspect everyone’s house from space, the end result will be to lower prices for people with homes in perfect condition and raise them for everyone else. This is potentially problematic because the people with…

At the risk of being callous, the goal of home insurance is to assess and manage risk. Choosing ignorance in the interests of giving some people a subsidy on the assumption that they may be poorer does not further these goals in any way I can see.

If the goal is redistribution, then using accurate risk data as a starting point seems preferable.

Re: Home insurers are dropping customers based on aerial images

#503

Post by shpx »

compiler-guy wrote: post #346
drekipus wrote: post #322

Earlier quoted context omitted.

Isn't insurance entirely a redistribution mechanism?

No. It’s a risk pooling mechanism. If a group of ten people all have a one in one-thousand per year chance of a million-dollar loss each year, then their annual premium will be: 10 x 0.001 x $1,000,000 = $10,000 (plus some administrative overhead and assuming a very basic risk model) It has nothing to do with who is rich and who is poor or making anyone come out ahead of their own losses.

If insurance was just about pooling risk, an insurer that had perfect information about the future would pool everyone into a one-man pool and charge everyone the price of their damage for the year +1 cent for itself.

But that's not what would happen. You would still have insurance because what we really have is 8 billion people in the world (or 300 million in America or 10 million in your state or 1 million in your city or 500 in your neighborhood/village) and each person in that group of people derives some utility from other people in that group not having to pay full price for their broken roof, whether that's because when you go talk to your neighbor he's not complaining about his roof all day or because your neighbor is your doctor and you want him in the hospital instead of running around trying to fix his roof all day or sitting at home wet because he can't afford it. The total amount of that utility multiplied by how much money the entire group makes might be less or more than the price of roofs for everyone in that group.

So it's both. You're trying to discover the network of people (or create/convince that network, sometimes by threat of violence in the case of government-mandated insurance) in whose interest it is to redistribute their wealth to a given person.

Re: Home insurers are dropping customers based on aerial images

#504

Post by barrysteve »

tptacek wrote: post #294

I don't really understand the privacy concern here. To wit: insurers can demand actual inspection of your home when making underwriting decisions. The condition of your house is very much their business. Why is an aerial photograph of your roof, which everybody in the world already has on Google Maps, such a big deal?

Demanding an inspection is a process that can be organized and scheduled around.

Your friend brings over a trampoline for Timmy's birthday party, you can take the risk of injury with no intent to claim on insurance. You can remove it before inspection.

Now you get pinged out of the blue by a satellite.

Adults don't need constant supervision. Should you believe they do, why not leave a multi-camera drone above your suburb and every insured house can be monitored for infractions 24/7.

There is no reason for the insurance company to withhold the image as evidence of a problem. Google Maps knows where my trampolines are, why is the insurance company hiding their cards?

An insurance company that surveils you 24/7 and makes sure you comply, is not covering any risk, it's a protection racket.

Re: Home insurers are dropping customers based on aerial images

#505

Post by lliamander »

pants2 wrote: post #375
imgabe wrote: post #338

Earlier quoted context omitted.

I think the issue is that in some cases the information is inaccurate and there are sometimes limited avenues for a customer to object if their insurance is cancelled based on inaccurate information. To the extent that the information is accurate, I agree. If you make an agreement with a company and buy insurance based on your statement that you don't have a pool, but then you do have a pool, I don't see any reason w…

Last time I was shopping for home insurance, an agent told me I was too close to a canyon, which I thought was strange because there are no canyons near me. They sent me a screenshot of the fire danger map where clearly it had the wrong location / coordinates for my address (they thought I was about a mile from where I really live). I pointed them to my address on Google Maps which has my correct location, but they s…

> but they said their system isn't wrong and the address coordinate mapping can't be changed anyway.

That is some breathtaking hubris.

Re: Home insurers are dropping customers based on aerial images

#506

Post by Kalium »

twoodfin wrote: post #410
20after4 wrote: post #232

Earlier quoted context omitted.

Because insurance isn't optional. If the law demands insurance then the law must assure equal access to the legally mandated insurance.

Which law demands home owners carry an insurance policy?

In the US, it's a requirement of mortgage lenders. This makes it less of a legal requirement and more of a de facto requirement, as most homes are purchased via mortgage in the US.

Re: Home insurers are dropping customers based on aerial images

#507

Post by Eisenstein »

skissane wrote: post #501
Eisenstein wrote: post #490

Earlier quoted context omitted.

> It isn't just about lawsuits, it is also about damages payouts. In the US, there is a very broad constitutional right to a jury trial, which extends to civil lawsuits; and (in many cases) the law entrusts the jury, not just with deciding whether the plaintiff has factually proven their case, but also with awarding damages. The big damages are punitive damages, not damages for compensation. Since we have rather lax…

Yes, it is the punitive damages which are really astronomically insane. But even merely compensatory damages in the US can be extremely high by the standards of other countries. For example, in the 2014 Florida case Cynthia Robinson v. R.J. Reynolds Tobacco Company, et al , the jury awarded US$23.6 billion in punitive damages as well as US$16.9 million in compensatory damages, for the death of the plaintiff's husband…

Pointing out outliers isn't really helpful when talking about what could be expected in an insurance claim.

Re: Home insurers are dropping customers based on aerial images

#508

Post by [deleted] »

lazide wrote: post #242
brogrammernot wrote: post #218

Earlier quoted context omitted.

This is always a fun topic for me. If everybody is sharing all the risk that’s the same thing (obviously I’m being simplistic) as them underwriting the risk themselves.

They’re opposites though? Someone underwriting their own risk might as well not have actual insurance, as they’re just on the hook for actual damages correct? So if they get sued for $1M, then they are on the hook for $1M (as an individual). If everyone is sharing the risk, then everyone is on the hook for $1M/number of people. So the individual that gets sued for $1M in a large state, might only be on the hook for a…

[deleted]

Re: Home insurers are dropping customers based on aerial images

#509

Post by jfim »

harimau777 wrote: post #495
potatolicious wrote: post #449

Earlier quoted context omitted.

> "If a group of ten people all have a one in one-thousand per year chance of a million-dollar loss each year" More importantly, each person in this group has a different chance of a million-dollar loss each year, and it's important if you're going to write a policy to get that chance as accurate as possible. Some members of the pool have a 1-in-1000 chance per year, others have a 1-in-10 chance. An efficient insuran…

Wouldn't an efficient insurance market be worthless since the expected net payout for everyone insured would trend to zero?

The EV of insurance is negative, in the sense that the expected money that one can expect to get out of insurance is less than the premium.

Insurance is for catastrophic losses. I don't pay for insurance to make a profit, I make it to avoid the large tail loss of having the house destroyed and having to pay the value of the mortgage to the bank.

Re: Home insurers are dropping customers based on aerial images

#510

Post by AdieuToLogic »

Kalium wrote: post #502
sarchertech wrote: post #318

Earlier quoted context omitted.

It’s an issue of scale. Similar to police tracking phones. Police have always been able to assign an officer to follow a suspect, but it’s expensive and therefore rarely done. If insurance companies can cheaply inspect everyone’s house from space, the end result will be to lower prices for people with homes in perfect condition and raise them for everyone else. This is potentially problematic because the people with…

At the risk of being callous, the goal of home insurance is to assess and manage risk. Choosing ignorance in the interests of giving some people a subsidy on the assumption that they may be poorer does not further these goals in any way I can see. If the goal is redistribution, then using accurate risk data as a starting point seems preferable.

> At the risk of being callous, the goal of home insurance is to assess and manage risk.

No, risk assessment and/or management is an internal operational concern.

The goal of insurance providers, home or otherwise, is to charge fees such that the insurer collects as much revenue as possible while simultaneously expending as little as possible to remedy claims.

Any justification legally available to an insurer supporting denying or reducing a claim will be employed.

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