Earlier quoted context omitted.
Company execs aren't writing the policies, actuaries are. Actuaries which spend their days analyzing all the minutiae of data and trying to quantize risk. If anyone knows the real risk/reward of putting merchandise in cabinets by zip code it's some actuary at some insurance firm. Arguing insurance companies don't follow the data and usually behave irrationally is ignoring reality.
> Arguing insurance companies ... usually behave irrationally is ignoring reality. Arguing that I claimed that insurance companies usually don't follow the data and usually do behave irrationally is ignoring what I wrote, which is reproduced below. > Even companies that you'd think would have everything straight sometimes don't. Assuming that a company that should be a sophisticated actor is ALWAYS doing the correct…
I agree they probably get some things wrong, but I think they probably get things right more often than not when it comes to analyzing risk. I wouldn't bet against the insurance companies on any random thing, even though I acknowledge they do make some mistakes. Chances are the insurance company understands the generalized risks on whatever they're underwriting more than I do.
If nobody was actually making claims for shrink, you really think the insurance companies would jack up the rates or require cabinets? It wouldn't just come from nowhere. And it's odd they only do it in some markets and not others. Around me there are no cabinets at Walgreens, CVS, Target, Walmart, and the other retailers mentioned in these comments. Obviously there's some level of targeting here going on, I wonder what data point they'd use...hmm...