Just because it is difficult to tell the bad from the good does not make it right. As a matter of practicality, I see WHY they discriminate, but that still doesn’t make it right.
Sailor and others: your argument is faulty. You will never persuade me that age (or any other type of) discrimination is valid; or that car insurance is the exception.
In fact, I don’t see an argument here. It is completely crystal clear that there is discrimination going on in the car insurance field… why this is acceptable I do not know. Probably because the ones who are affected most are the ones with the least say-so.
It’s not right to charge bad drivers higher insurance premiums? I think I’m missing something here.
Would you hire a blind man to drive your car? Would you hire a convicted child molester to watch your kids? Would you hire a klansman to lead a sensitivity training seminar? These are all forms of discrimination; if you think any of them are invalid, I’d like to know why.
Let me put it clearly: discrimination is the preference of some individuals over others. When it’s not justified, it’s bad; otherwise, it can be neutral or even good.
DING DING DING!!! What do we have for the winner, Bob?
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Or it could be for the (numerous) reasons cited in the past two pages.
How dare you compare >25 aged drivers to klansmen, convicted child molester, etc!!!
Really, think about what you are saying. I don’t easily get offended, but…
Should I get roman numerals seared onto my forehead for each year I’m alive, just to warn all the other old, responsible drivers out there that I’m under 25? Because surely I’m a maniac driver. I’m male too. Oh, shit better watch out.
Insurance companies are providing me with a service. I pay for that service (mandatorily by the way, so they’ve already got me)… so how can they charge me higher rates?
If I ran a carpet cleaning business, I can’t just go around and say, “Mr.Jones, since you have 5 kids, we’re going to charge you more than Mr. Peterson down the street because he only has 2 kids… our statistics show that houses with more kids have more stains on their carpets…”. YOU CAN’T MAKE JUDGEMENTS LIKE THAT!
It is a SERVICE. Never forget that.
You know what? I will understand the system in 20 years because I won’t be the one paying the exorbinant rates anymore.
I can’t understand the higher rates now, because I’m the one paying them.
You CAN understand the higher rates for young people because you AREN’T paying them. Of course it makes perfect sense to you.
If there were only one insurance company, and everyone kept driving, then that might work. But the insurance carrier is writing a 6 month or 1 year policy. They need be concerned with the policy period only. They really don’t care about how safe you are going to be in 10 years with a different carrier.
There are other issues involved in underwriting and risk assessment which involve other issues, but I get the feeling that you are not looking at thisw from the perspective of probability, time value of money and teh law of large numbers, so I will refrain.
I will say, that no one is an individual in underwriting. YOu can’t write to the individual because you will eventually lose money. You have to write to the actuarial numbers based on very large amounts of information. SO when you look at a 20 year old driver, you are really looking at them all.
First off, “>” means “greater than”. “<” is probably what you’re looking for. Secondly, think about what you’re reading. I was not comparing young drivers to such persons; I merely created such examples to show that not all discrimination is bad.
Insurance is highly competitive (as pointed out repeatedly by kabbes). If you feel that you’re paying too much, look for a different insurer.
Your carpet cleaning service would be well within its rights to do so. Your customers would be well within their rights.
You don’t seem to understand that insurance is more like gambling than any other business. The insurance company is betting on your not getting into an accident, and you’re betting that you will. This is fundamentally different from cleaning carpets.
Did you miss the part where I said that I was 21? I pay the higher rates, I will pay the higher rates for four more years, and IT MAKES SENSE TO ME. I don’t like it, but at least I understand what I don’t like.
Not everyone is out to get you. You may have the short end of the stick, but that’s not always unjustified. And you have it better than all the other poor, oppressed, lowly, and vanquished–to come out on top, all you have to do is wait.
Remember that we are coming off of a 10 year soft market. Here is what happened:
Insurers were able to get great returns on their money by investing it. In order to get their hands on more cash, they lowered their rates to get more cash. Usually they need to bring in $1.35 for every $1.00 they pay. Tehy could bring in less than they paid because they were making enough in investment. Now that the market is flat, they have to bring in $1.35 for every $1.00 in loss again.
This is called a hard market. YOu think you got it bad, OUr premium for CA work comp went up 66% or $400,000.
You: safe driver, comes to complete stop at ALL stop signs, uses turn signal always when appropriate, never runs a red light, or speeds up for a yellow, drives 2 MPH under speed limit at all times, never any unsafe lane changes…etc.
Your friend: unsafe driver, runs stop signs, red lights, unsafe lane changes, constantly speeds (never caught).
Both have same car, roomates, got driver license same day, same age (under 25).
You and He pay the same amount of premiums. This is what makes sense to you???
As I stated in my last post, I am fully aware of the difficulties in assessing anyone’s individual driving risk, I am not arguing with you on this point. Again, I am speaking theoretically, not application. Just because something CAN’T be done doesn’t make it right to not do it.
I wish I had known this 10 years ago, I could have attended college with a scholarship from the United Negro Scholarship Fund because how can they prove that I’m NOT black??
It’s not just a matter of practicality for the company, it’s also a matter of cost (financial and otherwise) to the consumer.I can think of two ways insurance companies could separate high-risk from low-risk drivers and possibly avoid using age.One would be to require that customers allow the technology (I think it was GPS) that caused the uproar when the rental car company used it to charge someone for speeding.I doubt many people would go for that. The other would be to have an insurance company inspector drive with a customer for enough hours to be sure they’ve demonstrated their normal driving habits (obviously many people can fake it for long enough to get a license, but it would probably be impossible to sustain for a week or two). I’m certain that the overhead associated with that would cause the lowest risk drivers to pay more than the average under 25 year old currently does,which means it would actually benefit no one.
Let’s make a simple example. Suppose I am an insurance company and I am insuring 20 drivers 20 years old at $3000 a piece and 20 drivers 40 years old at $1500 a piece. My total revenue from premiums is $90000 for 40 drivers. You propose they all pay $2250 each. Now look what happens: A number of young drivers who were not able to get insurance, now can get insurance, and a number of older people who could get it, now cannot. So now your composition is not 20 young drivers and 20 older drivers, it is 25 young drivers and 15 older drivers and to maintain the income from premiums to cover claims, now I have to get (253000)+(151500) = 97500 which / by 40 means rates are now $2437 which in turn expells some more safe drivers from the pool… you see where I’m getting at? (no, of course you don’t,… we do not want to be distracted by math or facts here, just use the word “discrimination” a lot to make it sound like a just cause)
Horhay, you keep repeating how unfair life is. Yes, I have already understood life is unfair. You have neglected to answer some questions though. I suppose, wanting to be consistent, you would prohibit all discrimination based on age or sex. Is that correct? You would ban discounts for seniors and for kids? Of course, there are ways of getting around this like basing the discrimination not on age per se but on some other factor closely correlated like being a student or a member of the AARP so you would have to ban that too… So, you are at a point where you have something which not only is negative to society as a whole (as has already been expalined many times) but which also meanst the government now is in the job of overseeing sales terms in every contract to make sure there is no discrimination of any sort. If I say, we will have a race and the winners will get a discount, that would surely be a sort of age discrimination. If I say people in zip code X will pay more than people in zip code Y, that would be age and sex discrimination unless the age and sex composition of both zip codes are similar. What you propose is unfair and if implemented would affect everybody very negatively.
Do you propose we make age and sex discrimination only in the motor insurance business or everywhere? I have asked this several times: why should I pay more to ride a bus or an airplane than a kid or an old person if it costs the company the same? Isn’t it more reasonable to outlaw this before you do it in the insurance business where there is a difference? Can you answer this?
>> Acco said: “All you statistical gurus can bend me over…”
Ah, with pleasure! Now we are getting somewhere! ::unzipping my pants:: Please assume the position
I can tell you how the most fair system would work.
Let’s say I am a clairvoyant underwriter. I can foresee every single accident that every applicant will have. I am, therefore able to be absolutely fair. What I would do is charge the applicant a premium that covered their accidents plus profit and overhead. Drivers who will have accidents will pay premium to cover their accidents. That is truly “fair.”
It also has a name: Self insured. If you think that you are not going to get in an accident that is your fault, carry only UM/UIM coverage. don’t worry about anything else because you are a safe driver and will never get in an accident and therefore will not get fleeced by insurance carriers.
Got it? As long as my friend is never caught, the statistics show that we represent the same risk to the insurance company.
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Not doing the impossible is immoral. Gotcha.
The UNSF applies to people who are discriminated against because they are black. If you don’t look black, they probably won’t take you, but they have good reason not to: you aren’t being discriminated against. Search for Collounsbury’s posts in the pit for an elaboration.
>> Just because something CAN’T be done doesn’t make it right to not do it.
Oh man! This is rich! This is a pearl of wisdom! Just when you thought you had heard it all something like this comes along. We are all guilty of doing things that are impossible for us to do! No question about it. Don’t deny it, just ask for forgiveness and hope for the best. <sigh>
I’ve heard many people complaining about things that are never gonna change, happens all the time.
Second,
I agree with this (repetitive) statement!!! Geez, read my posts! Although, “can’t measure this” should be replaced with “would have an extremely difficult and expensive time measuring this”
I also agree with this:
Again, read my posts!
You keep looking at it from an insurance company point of view, my view was from the insured. If you think it’s fair for a safe-driver to pay the same as an unsafe-driver (regardless if the insurance company can measure ‘safeness’ ), then more power to you!
I note just for the record that some questions I have posed repeatedly have gone unanswered so far which I would interpret to mean those on the other side of the argument do not have an answer.
The concept good driver / bad driver is so nebulous you cannot even begin to measure it. It is not expensive to measure, it is impossible. But even if it were possible and expensive, it would probably cost more to measure it than to pay the present premium.
And, of course, no one considers himself a bad driver; just a good driver with bad luck.
"horhay - each insured party may pass through those ages (although not all - some don’t get their licences until later and others stop driving for whatever reason, but I digress). However they don’t do it with the same insurer. As I said, motor insurance is very competitive. As such, customers tend to change insurer every few years. Now if that insurer has been charging cheaper rates to the younger person then they’ll never get their money back as increased rates in future years because they’ve lost their business.
What you’re proposing would only even begin to work if everybody was legally forced to have the same motor insurer throughout their whole driving life. And even then it would have the problems I’ve already identified."
Kabbes–This makes no sense. If ALL insurance companies could not use age as a factor then ALL insurance companies would be charging under 25 drivers less. I don’t see what the problem with this is. There would still be competition between insurance companies. The insurance companies would just be following a different set of rules. If one company doesn’t play it right they might go out of business. To me that seems just as competitive, if not more so than the current system.
“If there were only one insurance company, and everyone kept driving, then that might work. But the insurance carrier is writing a 6 month or 1 year policy. They need be concerned with the policy period only. They really don’t care about how safe you are going to be in 10 years with a different carrier.”
Mr. Zambezi–You are looking at this within the confines of the way it currently works. If insurers couldn’t discriminate by age then maybe they would no longer be concerned with insuring the driver for the policy period only. The mindset of the insures would become totally different. EVERY INSURANCE COMPANY WOULD BE FACED WITH THE SAME DIFFICULTIES, WHICH MEANS THAT THERE WOULD STILL BE COMPETITION BETWEEN THE INSURANCE COMPANIES TO KEEP YOUR BUSINESS.
“Horhay, you keep repeating how unfair life is. Yes, I have already understood life is unfair. You have neglected to answer some questions though. I suppose, wanting to be consistent, you would prohibit all discrimination based on age or sex. Is that correct?”
Sailor-- Yes. That is correct. Once a person becomes 18 they become an adult in the eyes of the law and therefore they should be treated no differently than anyone else. It would be fine to discriminate against CHILDREN below the age of 18. Once someone becomes 65 they are a SENIOR CITIZEN. It is fine to give SENIOR CITIZEN’S discounts, but between the ages of 18 and 65 everyone should be treated equally.
