[ytx]

  > "More specifically, automakers are selling access to the data to Lexis Nexis, which is then crafting “risk scores” insurance companies then use to adjust rates. Usually upward"

In an ideal world, such data-harvesting might lead to cheaper prices / a more efficient insurance market - which would make the privacy loss worth considering from a trade-off standpoint, at least in theory.

Unfortunately it's instead likely to just lead to higher margins for insurance companies. And the only way to compete would be to harvest more data for better predictions.

[xboxnolifes]

> In an ideal world, such data-harvesting might lead to cheaper prices / a more efficient insurance market - which would make the privacy loss worth considering from a trade-off standpoint, at least in theory.

In an ideal world (read: perfect information knowledge), this would lead to insurance being a bad deal for every consumer of it. In the theoretical position where insurance companies can accurately price each individual customer based on their habits, they will charge them exactly what they cost _plus_ a margin.

This is only useful for a consumer if they cannot access cash or a credit line to pay for a sudden large expense. Instead, insurance effectively becomes paying the credit line ahead of time.

[jowea]

> This is only useful for a consumer if they cannot access cash or a credit line to pay for a sudden large expense.

Isn't that the main point of insurance?

Insurance can also socially redistribute bad things. Which fair enough it is in practice a result of insurance but I don't think that's what it was invented for. And indeed the better the insurer's crystal ball the smaller this effect is.

Although in practice I don't think there ever will be a crystal ball good enough to make insurance a bad deal for everyone like that. You always have to insure against another driver being bad or just plain bad luck.

[garaetjjte]

>Isn't that the main point of insurance?

No, insurance claim can be larger than sum of lifetime premiums, contrary to credit.

[brewdad]

Again, that’s the point of insurance. Most of us will pay more in premiums than we ever get paid in claims. A few of us will avoid bankruptcy because insurance will pay out a claim we can’t otherwise afford either through cash or any line of credit we could get.

The trick is no one can know which side of the ledger we’ll fall on. You can be the world’s safest and best driver and still get t-boned by a driver with no assets and no insurance.

[mindslight]

No, the point of buying insurance is to reduce your individual variance even though your average cost goes up. It's not an individual savings plan, but rather shared pooling of risk.

[xboxnolifes]

In a perfect information world, there is no shared pooling of risk. You are paying exactly what you will cost, plus margin. That is the point im trying to make.

[mindslight]

By "perfect information" do you mean the ability to predict the future? Because that is what is necessary to make your statement true.

Because in general no, people buying insurance do not pay in what they will individually cost (plus margin). Rather most will be paying in much more than they will ever cost, whereas some will cost much more than they have, or ever will have, pay in. One total property loss or serious at-fault auto collision (say ~$400k) will dwarf a lifetime of premiums ($2k/year for 50 years?).

The point is that such things are rare, so most people will have zero of them over their lifetime. But even perfectly knowing the a priori chance that each person may suffer a catastrophic loss, you can't know which specific people it will be.

[username332211]

Insurance companies don't have to make money from underwriting or insurance.

[thfuran]

In an ideal world, such data harvesting would be illegal, with liability adhering to the executives pushing for and approving the initiative as well as any legal counsel involved. Acquiring the data should require explicit, truly informed, and revocable consent not buried in a bunch of BS and not required for the purchase of a vehicle or insurance.

[ytx]

I wholeheartedly agree that the dark patterns around consent are atrocious. But I also think hn is probably biased in its valuation of an individual's data.

If companies offered say a $50/month discount on car insurance premiums in exchange for gathering data, I imagine a large proportion of people would indeed opt in to that (setting aside issues of selection bias or trust in this ideal world)

[thfuran]

People should be free to do that. My objection is to the fact that currently just existing in modern society (in the US) means you're being spied on by everyone from the manufacturer of your tv to the grocery store, and huge amounts of your personal data is sold to anyone who wants it.

[elzbardico]

Basically they keep the profits and socialize the risks.

[lotsofpulp]

> Unfortunately it's instead likely to just lead to higher margins for insurance companies.

Why? Insurance pricing is heavily regulated, and profit margins for insurers have always been very low.