Expanding on this idea - can health insurance companies fly a drone over my house and see me in my hard eating a cheeseburger and cancel my coverage? Can an auto insurer do the same and cancel my coverage because they see me doing burnouts in my driveway? Seems like a giant privacy violation but I'm no legal expert.
If you think about it, the logical conclusion here is that insurance companies could end up with no customers at all. The ideal customer for them is someone with almost zero risk. But if their algorithms get advanced enough to accurately assess who’s a safe bet, anyone they do insure might as well take it as a sign that they don’t actually need insurance in the first place.
It's a self-defeating cycle. As the models improve, they'll start excluding anyone who might ever need to file a claim. The more they optimize, the less relevant they become. In the end, insurance might evolve into something entirely different or become obsolete altogether. It's the ultimate paradox of trying to reduce risk to zero: You end up with no business at all.