Hacker News new | ask | show | jobs
by zerni 1830 days ago
The root of this problem is the conflict of interest in insurance. You lose money when settling claims.

There are some companies addressing this problem for consumers.

Look at Lemonade.com, they do not benefit from not paying out as their margin is fixed or Laka.co makes money when claims are paid.

(Disclaimer: I work for Laka)
3 comments
rubyfan 1830 days ago
Sorry but Lemonade’s ‘fixed margin’ is BS. I’m not aware of any other insurance company that benefits from a fixed margin or spins what is otherwise OIE as profit. Most other carriers in the US pay for distribution, e.g. agents selling their policies or Google and other targeted ad platforms. Most carriers pay out a distributor margin and then are on the hook for the full risk.

Lemonade isn’t fixing anything for consumers except maybe UX.

If there is one thing I’ve learned over decades of startup and corporate experience, people that sell on ‘transparency’ are generally full of shit.

link
yold__ 1830 days ago
> Look at Lemonade.com, they do not benefit from not paying out as their margin is fixed

Lemonade reinsurers the vast majority of the risk. Their historical profitability will determine what reinsurers charge them (which is a premium). Basically all of their risk (75%) is reinsured.

If/when reinsurers tire of thin margins and high volatility, they'll hit Lemonade with a rate increase. Lemonade can either retain more of the risk, or pay the reinsurance premiums. The additional capital required to do that will either come from policyholders or shareholders.

link
thatguy0900 1830 days ago
Wouldn't the root of the problem be how much insurance is mandatory? If it wasn't then people just wouldn't buy it if they never actually paid out
link
jopsen 1830 days ago
How many times have your house burned down?

Events worth insuring against are so rare that you can't use experience from the last time to pick a better insurance company.

Hence, why the market is regulated.

Actually, I think my both renters and auto insurance contains a legal assistance insurance component, which is probably useful if I need to sue the insurance company :)

(I'm not sure it's as large as it ought to be, but the idea is nice)

link