Here’s the thing, insurance companies exist to make money. Part of their business model is insuring that they’re charging the right rate for the insurance they offer. They do this using actuarial analysis; the closer they get to being right, the higher their profit margin. For an insurance company the simple profit/loss equation is ([Premiums] + [Investments]) - ([Sales Costs] + [Incurred Losses]) = Profit
Investments meaning how much they make off that huge pool of premium money they collect and hold (they don’t just hold it in stasis, they make massive investments with those premiums.) Sales Costs are similar to the COGS of most other types of business, basically it’s the cost of selling the product, cost of paying actuaries, cost of setting the rates, basically the cost of all the dudes who wear suits and are employed by the insurance company.
If insurance companies don’t set their rate using the actuarial tables, then things get very dicey. For example they could be charging a very low rate for something that has a high risk of occurring and will be very costly if it does. This can create a situation in which the insurance company makes no profit and goes out of business, or worse, it doesn’t have even enough money to cover all of outstanding claims made by policyholders (the equivalent of going to the bank and finding out they can’t honor the amount of money in your savings account–luckily something the Federal Gov’t has insulated most average Americans from experiencing.)
When you start monkeying with the actuarial side of it, and say that insurance companies can’t charge a woman less because the actuarial tables say she’s less of a risk, that just means the insurance company is no longer acting as efficiently. It might mean a moderate reduction in rates for men and an increase in rates for women. But its “societal effect” is society as a whole will be paying in aggregate more premiums. Because instead of being able to ride closer to the ragged edges of the profit margin (because competition pushes all prices downward in most scenarios), in aggregate the insurers will have to collect more money overall to make up for the fact they can’t charge rates that are aligned with the actuarial science.
I know little about the insurance business, I’m shocked they are expecting a 10% savings for men. Insurers will not insure someone if they expect based on the actuarial science that the person will cost them more in incurred losses than they will bring in via premiums, that’s just not how they operate. So if insurance companies are even capable of reducing male rates by 10%, it means they were operating at a margin over and above the the minimum to a degree much higher than what I expected. Like I said, I know little about the insurance business. My expectation was that competition has mostly pushed premiums down as low as the insurance companies can go (and still be following the statistics), because the insurance companies are mostly just interested in maximizing volume of customers–higher volume means more investment money, and I always assumed turning a profit on the invested premiums was the real powerhouse of insurance company business.
If that wasn’t the case, and they’re lowering male rates by 10%, then I guess a bigger portion of insurance profits come from premium markup than I had anticipated.