Thinking: the internet will crush businesses that rely on information asymmetry or opacity. Some biz models depend on occasional "bargains," like hiring a 5x dev for a 2x salary, or insuring a 5x safer driver for 1/2 the premium. These models will struggle more & more over time.
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Replying to @lpolovets
It's my impression that automobile insurance *doesn't* believe there is any material edge to underwriting; they expect to pay Leo's premiums *to Leo* rather than expecting your premiums to materially subsidize higher risk drivers. Underwriting is almost a marketing function.
5 replies 0 retweets 23 likes -
Replying to @patio11
I'm not sure I understand. If I'm a 3x safer driver but only get a 20% safe driver discount, doesn't that mean my premium is subsidizing other drivers?
1 reply 0 retweets 1 like -
Replying to @lpolovets
I think actuaries doubt the existence of 3X safer drivers. There is no underwriting edge capturable versus the usual table; controlling for your age, gender, and zip code, you're actuarially indistinguishable from their worst insurable risk.
3 replies 0 retweets 9 likes
Given this sketch of the actuarial reality (which I may be wrong about), the safe driving discount is basically indistinguishable from "20% off if you're a Colts fan." Which is a reasonably marketing promotion in auto insurance! It gets you the float of typical risks ~cheaply!
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