Ultimately, we’d all (or at least most of us) would like a world where the necessities like electricity and health care and the near-necessities like insurance and groceries and cars were a) easy to get, b) plentiful, c) cheap, d) reliable with no gotchas, and e) providers were eagerly competing to provide those quality services at low prices.
We’d also all like ponies and an ice cream dispenser in our freezer.
Second point:
Most of us have a “sticky” approach to purchases. Which marketers both hate and exploit. My grocery store has 37 kinds of toothpaste. But I don’t make a fresh decision on which to buy every time I go; instead I reach for the same one I bought last time. Over and over for years until forced to change when that kind is no longer stocked in nearby stores or maybe not even made at all.
Things like banks and insurance are famously extra sticky. Folks want to have to decide once, and want to never have revisit the decision. The products are complicated, difficult to compare, and the benefits rather nebulous. Nobody enjoys shopping for [whatever] insurance. Nobody. It’s a problem that we want to stay fixed.
Historically it was to banks / insurers / toothpaste companies’ advantages to minimize customer churn. Keep up happy enough and collect that revenue for our entire life.
That was then; here comes now …
Insurance is an interesting business. The original idea of course is risk spreading, not risk elimination. e.g. If one in a thousand houses are destined to burn down, better to have 1000 people shoulder one thousandth of the cost of a new house than 999 people pay nothing and the 1000th lose everything.
With the statistical techniques of e.g. 1890, that worked great. Then of course insurance companies got the idea that they could also do risk minimization too. Require big buildings to have fire sprinklers, etc. Insist on cars that had more damage-resistant bumpers. Benign things that increased collective safety while improving their bottom line, and/or if the insurance regulator was thorough or competition was real enough and big enough, also reduced premiums.
Of course with modern Big Data, it’s easy enough to stop treating “All homeowners in Louisiana” as an undifferentiated lump, and instead have the computer assign a risk score to each individual policy holder. Then visit the bad risks and either cancel them, or demand onerous changes to their properties. Such as “clear cut the entire woods on your forested land in fire country.” Or perhaps worse, “Quit driving a jacked-up pickup truck since those are highly correlated with fireworks accidents that burn down houses and also with drunken collisions with your own garage”. Correlations are real; causation perhaps a different thing.
Genetic testing for health insurance is a similar quagmire. The industry would love to gen-test everyone and charge (or deny coverage) accordingly. They’d also love to test for tobacco, alcohol, and drug consumption about once a month and charge accordingly for that too.
As a social / governmental matter we’re still trying to live in the world before customers could practically be differentiated. While the insurers can now practically differentiate and therefore customize their charges (some might say “discriminate”, but that opens a larger debate) to the individual risks being individually run.
Only regulation stands in their way, and if the regs are swept away in an ideological frenzy, insurance will change from a risk-pooling system into one that really amounts mostly to pre-paying into a non-interest bearing unregulated account an amount exceeding your lifetime future expenditures on [whatever].
By and large, nations don’t get the big businesses they deserve. They get the big businesses they regulate.
