Your Government, Your Friend

[Sol]

Brick wrote

Tell me Davin: do you think car accidents are routine; ordinary occurrences performed as part of a regular course of action? If so, it would be best not tell your insurance company.

Brick wrote

Of course car accidents happen everyday- that's not the point.

So, car accidents are routine.
So, If that's not the point why ask the question in the first place ?

Brick wrote

Insurance companies want to know the odds of an individual being in a car accident, not the odds of one happening at all, anywhere.

If it is about the individual, why do my premiums go up based on other peoples car accidents ?

How can they work out the odds for me as an individual, tarot cards, seance ?
or do they extrapolate the data from a routine everyday occurrence (car accidents).

pop question - Birth control, routine everyday, occurrence - true or false ?

[Victus]

Sol wrote

So, car accidents are routine.

For all drivers, yes; for individual drivers, no. Individuals buy insurance.

Or, since this seems to be confusing you...

When a driver buys car insurance for $X, he's effectively making the claim that, "Over the term of this policy, I bet I'm going to have a car accident that would cost me more than $X". Conversely the insurance company, by insuring the driver, is saying "I bet you won't". While it's true that some drivers will, as a matter of course, have an accident, it's impossible to predict which driver(s) will have an accident. If it were possible to predict which specific drivers were going to have an accident, it would be impossible to 'insure' them.

Sol wrote

So, If that's not the point why ask the question in the first place ?

Because you don't seem to understand the difference between individual and systemic risks, and as a consequence, don't understand what insurance even does in the first place.

Sol wrote

If it is about the individual, why do my premiums go up based on other peoples car accidents ?

A few possibilities, off the top of my head.:

1) Someone else having an accident gives the insurer useful information about you/other policy holders. If there is an overall increase in the rate or cost of car accidents for a given period without any discriminating factor (e.g., only young men between 16-20 experience an increased risk), then the overall risk has increased, and ergo the insurer raises premiums to reflect the new level of risk.

2) Community rating (charge everyone the same), usually under government mandate. If there is information the insurer can use to discriminate which groups have which levels of risk, the rational thing to do is to charge each individual based on their aggregate level of risk. Community rating prevents this, in effect subsidizing the risky and punishing the not-risky.

Sol wrote

How can they work out the odds for me as an individual, tarot cards, seance ? or do they extrapolate the data from a routine everyday occurrence (car accidents).

The latter, using actuarial methods

Sol wrote

pop question - Birth control, routine everyday, occurrence - true or false ?

For all women, yes; for individual women on birth control, yes. Hence, it's not insurable*.

Insurance markets collapse for low-cost, high-probability outcomes because running claims through insurance carries costs itself. For instance, suppose you eat the same lunch every day, and it costs $5. You want to buy insurance against the 'risk' that you will buy the same lunch tomorrow ($5 cost, 100% probability). The insurance company expects, with 100% certainty, to have to pay you $5 tomorrow, but they have to pay their nice administrative worker for handling the claim ($0.10) and they want to make some money from this deal ($0.05), so ultimately they charge you $5.15 in premiums and then pay out $5 for your lunch. Since there isn't much of a market for buying $5 worth of goods for $5.15, the insurance market for 'tomorrow's lunch' (and all low-cost, high-probability outcomes) collapses.

Replace 'lunch' with 'birth control pills' and you can see why the economically literate don't take this seriously as a means of helping women access birth control.

*Insurance companies might have a self-interested reason to cover birth control, to the extent that doing so is cheaper than covering (unwanted) pregnancies, but I don't know how the numbers play out one way or the other. Since insurance companies don't appear to have covered them in the past, I suspect that covering birth control is more expensive than not covering birth control (i.e., the reduction in unwanted pregnancies isn't enough to re-coup the costs), probably because birth control doesn't 'stop' pregnancies, so much as controls when they happen in the long-run.

[ILOVEJESUS]

I buy insurance because the law makes me do it. This means that insurance companies form cartels that charge what ever they want, and I as a punter have to just dig into my pockets. If you took away the legal obligation I doubt so many drivers (UK of course) would participate. It certainly wouldn't be as profitable. In fact it would be quite the opposite.

[Stargazer]

ILOVEJESUS wrote

I buy insurance because the law makes me do it. This means that insurance companies form cartels that charge what ever they want, and I as a punter have to just dig into my pockets. If you took away the legal obligation I doubt so many drivers (UK of course) would participate. It certainly wouldn't be as profitable. In fact it would be quite the opposite.

I think this applies to the US as well.

[Victus]

ILOVEJESUS wrote

I buy insurance because the law makes me do it.

Out of curiosity, do you have insurance that covers injuries to yourself/damage to your car?

ILJ wrote

This means that insurance companies form cartels that charge what ever they want, and I as a punter have to just dig into my pockets.

Even with a mandate in place, insurers still face competitive pressure to keep prices low. The mandate removes the (legal) option of not buying insurance, but it doesn't in any way influence which provider one chooses, or their ability to effectively form a cartel (e.g., by overcoming defection).

ILJ wrote

If you took away the legal obligation I doubt so many drivers (UK of course) would participate. It certainly wouldn't be as profitable. In fact it would be quite the opposite.

As long as insurers can vary the premium rates to accurately reflect risk (plus costs), they can always make a profit.

[Sol]

@Victus
Sadly, that screed you posted is wasted on me. I have little interest in what you think. (I use the word think in the loosest possible terms).

Unfortunately in the real world, not pompous prig world. I know more about insurance than I would like. its a real thing, not an academic exercise, not a personal opinion. Its a living breathing bag of shit that I have to deal with day in and day out.

Both you and Brick are simply naive and lack the required level of ability to engage in honest discussion, debate or dialectic.

Honestly dude, don't waste your time with me, It isn't worth it.

[Brick]

Sol wrote

So, car accidents are routine.
So, If that's not the point why ask the question in the first place ?



If it is about the individual, why do my premiums go up based on other peoples car accidents ?

How can they work out the odds for me as an individual, tarot cards, seance ?
or do they extrapolate the data from a routine everyday occurrence (car accidents).

pop question - Birth control, routine everyday, occurrence - true or false ?

Insurance companies do their business with individuals, not groups. Your insurance company uses your age, gender, and other information and compares it to actuarial tables to predict the odds of you being in an accident. That's how they calculate your premium.

Your premiums don't go up beacause of other people's accidents. If anything, they will go down over time because older drivers are less likely to have accidents. In the US, most car insurance companies give large discounts to drivers once they reach the age of 25- even more if they've been accident-free.

The purchase of birth control is a routine event which is totally controlled by the person buying it. That's not really the case with car accidents.

Did you ever think about the unintended consequences of this law? If insurance companies have to cover birth control, they will charge higher premiums. If the employers, who purchase most of the health insurance,
have to pay higher premiums, they now have a good reason to higher fewer women or pay them less. The price of birth control will surely rise because the producers know that the covered consumers no longer care what the price is. The higher price will make it even harder for uninsured people to get birth control.

It's a terrible idea with great appeal to ignorant and politically-savvy.

ILOVEJESUS wrote

I buy insurance because the law makes me do it. This means that insurance companies form cartels that charge what ever they want, and I as a punter have to just dig into my pockets. If you took away the legal obligation I doubt so many drivers (UK of course) would participate. It certainly wouldn't be as profitable. In fact it would be quite the opposite.

For someone with an expensive car, I can see the desire for insurance. In the US, the risk of lawsuits is another huge reason to carry it.

Sol wrote

@Victus
Sadly, that screed you posted is wasted on me. I have little interest in what you think. (I use the word think in the loosest possible terms).

Unfortunately in the real world, not pompous prig world. I know more about insurance than I would like. its a real thing, not an academic exercise, not a personal opinion. Its a living breathing bag of shit that I have to deal with day in and day out.

Both you and Brick are simply naive and lack the required level of ability to engage in honest discussion, debate or dialectic.

Honestly dude, don't waste your time with me, It isn't worth it.

So what's your big beef with insurance?

[ILOVEJESUS]

Victus wrote

Out of curiosity, do you have insurance that covers injuries to yourself/damage to your car?



Even with a mandate in place, insurers still face competitive pressure to keep prices low. The mandate removes the (legal) option of not buying insurance, but it doesn't in any way influence which provider one chooses, or their ability to effectively form a cartel (e.g., by overcoming defection).



As long as insurers can vary the premium rates to accurately reflect risk (plus costs), they can always make a profit.

I have insurance for my car fully comprehensive. However, I would not bother if it wasn't a legal requirement. It is a very convoluted and "mafia like" affair in the UK. Insurance is obviously a good idea, but due to the mandate of government it is a lot more profitable and punitive than it needs to be. Take away a legal requirement for it and prices would have to fall to levels that would encourage people like me to want to take it out. The profit would go south quickly.

[Sol]

Brick wrote

Insurance companies do their business with individuals, not groups. Your insurance company uses your age, gender, and other information and compares it to actuarial tables to predict the odds of you being in an accident. That's how they calculate your premium.

[Sigh] This, as I explained to Vicky, is why it's a waste of time.
"Insurance companies do their business with individuals, not groups" - You have written this as a fact.
Insurance companies do their business with individuals, basing their information and data on larger groups. would be more accurate

You then contradict your first principle (the "not groups" bit), by using the phrase "actuarial tables" which is correlated data over a wide range of information which may be applied to an individual.

You are conflating the end result (individual cost) with the process (group calculation).

Brick wrote

Your premiums don't go up beacause of other people's accidents. If anything, they will go down over time because older drivers are less likely to have accidents. In the US, most car insurance companies give large discounts to drivers once they reach the age of 25- even more if they've been accident-free.

Again this would be logical were it not for the fact that real life and my insurance company tell me differently. Logic versus real world. Profit wins.(why else would you they be in business ?)

Brick wrote

The purchase of birth control is a routine event which is totally controlled by the person buying it. That's not really the case with car accidents.

Again conflating - if birth control is controlled by the person buying birth control , then car accidents are controlled by the person driving the car. (makes no real sense).

You cannot control something by buying it, if you don't have a choice about buying it. That indicates lack of choice and lack of control.

Brick wrote

Did you ever think about the unintended consequences of this law? If insurance companies have to cover birth control, they will charge higher premiums. If the employers, who purchase most of the health insurance,
have to pay higher premiums, they now have a good reason to higher fewer women or pay them less. The price of birth control will surely rise because the producers know that the covered consumers no longer care what the price is. The higher price will make it even harder for uninsured people to get birth control.

Again the switch around, Car insurance premiums can drop but birth control premiums could go up ? What about a little free market competition wouldn't that model work.

Brick wrote

So what's your big beef with insurance?

I resent being forced to give money to prop up banks, building societies and insurance companies, just so the "free" market economy can have the patina of being successful.
(I cannot have a mortgage, a car, a loan, etc without having to have insurance of some kind. No choice, no control)

[ILOVEJESUS]

Sol wrote

[Sigh] This, as I explained to Vicky, is why it's a waste of time.
"Insurance companies do their business with individuals, not groups" - You have written this as a fact.
Insurance companies do their business with individuals, basing their information and data on larger groups. would be more accurate

You then contradict your first principle (the "not groups" bit), by using the phrase "actuarial tables" which is correlated data over a wide range of information which may be applied to an individual.

You are conflating the end result (individual cost) with the process (group calculation).



Again this would be logical were it not for the fact that real life and my insurance company tell me differently. Logic versus real world. Profit wins.(why else would you they be in business ?)



Again conflating - if birth control is controlled by the person buying birth control , then car accidents are controlled by the person driving the car. (makes no real sense).

You cannot control something by buying it, if you don't have a choice about buying it. That indicates lack of choice and lack of control.



Again the switch around, Car insurance premiums can drop but birth control premiums could go up ? What about a little free market competition wouldn't that model work.




I resent being forced to give money to prop up banks, building societies and insurance companies, just so the "free" market economy can have the patina of being successful.
(I cannot have a mortgage, a car, a loan, etc without having to have insurance of some kind. No choice, no control)

NIcely put. Some kind of balance is important. I think thuis is where I differ a lot from Brick and Victus. I am all for free markets. But can anything be truly free and workable?

[Victus]

ILOVEJESUS wrote

I have insurance for my car fully comprehensive. However, I would not bother if it wasn't a legal requirement.

Then rejoice, because it's not. As far as I can tell, the UK only requires you to buy third party insurance, or what we would call liability or personal responsibility insurance. That is, you are required to buy insurance against destroying others' property or injuring others, but are free to run the risk of financial losses to yourself.

So why do you have full coverage, then?

ILJ wrote

It is a very convoluted and "mafia like" affair in the UK. Insurance is obviously a good idea, but due to the mandate of government it is a lot more profitable and punitive than it needs to be.

I still haven't heard an argument as to why a mandate would increase either individual premiums or the profitability of covering a given policy. Indeed, most of the arguments I've ever heard for mandated auto insurance run in the other direction; mandating everyone to buy liability insurance would lower the costs of personal property protection insurance for the average, responsible driver.

ILJ wrote

Take away a legal requirement for it and prices would have to fall to levels that would encourage people like me to want to take it out. The profit would go south quickly.

Based on what I can tell about UK insurance mandate laws, you already buy auto insurance voluntarily. So apparently prices have already lowered sufficiently to encourage you to buy.

[Victus]

Sol wrote

[Sigh] This, as I explained to Vicky, is why it's a waste of time.
"Insurance companies do their business with individuals, not groups" - You have written this as a fact.

Yep.

Sol wrote

Insurance companies do their business with individuals, basing their information and data on larger groups. would be more accurate

Sure. Even more accurate would be, "Individuals are the purchasers of insurance, and their premiums are based on their individual risk profile, which is made up of a combination of their individual behaviours and various group memberships of varying risk levels.

Sol wrote

You then contradict your first principle (the "not groups" bit), by using the phrase "actuarial tables" which is correlated data over a wide range of information which may be applied to an individual.

You are conflating the end result (individual cost) with the process (group calculation).

Which is perfectly reasonable, since everyone was talking about the end result - that individuals are he purchasers of insurance.

Sol wrote

Again this would be logical were it not for the fact that real life and my insurance company tell me differently. Logic versus real world.

Might I ask which insurer you use?

Sol wrote

Profit wins.(why else would you they be in business ?)

Exactly.

Sol wrote

Again conflating - if birth control is controlled by the person buying birth control , then car accidents are controlled by the person driving the car. (makes no real sense).

Taking birth control is perfectly under the control of the person taking it. Having a car accident isn't (it's a probabilistic risk stemming from driving a car).

'But driving a car is completely under their control as well!!!' you say? True, but who buys car insurance when they don't have a car?

Sol wrote

You cannot control something by buying it, if you don't have a choice about buying it. That indicates lack of choice and lack of control.

Purchasing birth control is entirely under the control of the purchaser. Having a car accident is not entirely under the control of the driver. Understand the difference yet?

Sol wrote

Again the switch around, Car insurance premiums can drop but birth control premiums could go up ? What about a little free market competition wouldn't that model work.

Markets make things as cheap as they can be, it doesn't make things free of charge. Birth control costs money. If insurers are forced to cover the low, regular cost of birth control, then they will predictably pass the costs on to their customer (employers) via higher premiums.

Sol wrote

I resent being forced to give money to prop up banks, building societies and insurance companies

So do libertarians.

Sol wrote

just so the "free" market economy can have the patina of being successful.

What does government intervention in the economy have to do with free markets, besides curtailing them?

Sol wrote

(I cannot have a mortgage, a car, a loan, etc without having to have insurance of some kind. No choice, no control)

Lenders insist that you buy insurance on their assets while you're in possession of them as a condition of giving them to you. What's unreasonable about that?

[ubs]

Victus wrote

Even with a mandate in place, insurers still face competitive pressure to keep prices low.

Not as much as you might think. There are a lot of artificially created barriers to entry in that industry and like the banks, the "regulators" come exclusively from larger insurers?

...

I was confused by something sol said. Is someone arguing that guaranteed demand lowers the price of insurance? If so that is clearly not the case. Even if you didn't know anything about economics the health insurance fiasco provides a clarifying example.

[Victus]

ubs wrote

Not as much as you might think. There are a lot of artificially created barriers to entry in that industry and like the banks, the "regulators" come exclusively from larger insurers?

True, but I don't think this is directly related to mandates specifically.

ubs wrote

I was confused by something sol said. Is someone arguing that guaranteed demand lowers the price of insurance? If so that is clearly not the case. Even if you didn't know anything about economics the health insurance fiasco provides a clarifying example.

Not so far as I am aware. The closest would be...

1) Brick arguing that car insurance prices go down over time for safe drivers/older drivers (and that the average costs might go down as the population as a whole ages away from adolescence). The former is probably true, the latter probably isn't, if insurers can accurately assess risk based on age.

2) I mentioned to ILJ that one of the often-used arguments in favor of mandated auto insurance was that it would lower premiums for currently-insured policy holders by forcing uninsured, high-risk drivers into the market (and into having them absorb their own costs, rather than have existing premium-payers do it when there's an accident), although I didn't specifically endorse this view.

[Sol]

ubs wrote

I was confused by something sol said. Is someone arguing that guaranteed demand lowers the price of insurance? If so that is clearly not the case. Even if you didn't know anything about economics the health insurance fiasco provides a clarifying example.

Yes, that is what they argued. However the health insurance thing is totally different when they argue that. (that is my point).

There is no consistency in their argument nor the basis for their argument.

Both are point scoring on differential interpretation of real life....

For what purpose ? fucked if I know.

I would answer but what's the point, they are partially correct but so, so wrong, in so many areas.