[kirse]

After pricing auto insurance recently it's pretty obvious this is happening in that industry as well. While shopping around multiple quotes across 7-8 providers and calling at least 5 separate insurance agents to try to gather quotes, all of these companies are providing similar quotes within a few cents/dollars of each other.

I vent my frustration to a few agents about the yearly rate increase insanity and they all shrug, give their non-empathetic "I understand" telephone script and blame it on the "system" calculating the prices and make some useless excuse about inflation.

I've got a clean driving record, a fully paid-off cheap vehicle, in a reasonably responsible age bracket, and the cost of decent auto insurance these days is essentially another car payment. Within 5 years I'll have paid back the insurance company 60-70% the value of the vehicle. The Gov/FTC needs to take a look at these companies, especially if they're forcing us to hold the insurance to reasonably participate in society.

[ejb999]

The fact that you car is 'cheap', is not the driving force behind the cost - you may drive a $10K used car, but you can still crash into someone else's $120K car and also put the other driver in the hospital with 100's of thousands of dollars of medical expenses.

Once your car is paid off, you can usually drop the collision damage on your own car - but don't be surprised if you are still paying thru the nose.

Curious though: what state are you in, and how much are you paying?

As comparison, we own three cars (2015, 2013 and 2011), for three drivers (youngest is 21) and have pretty decent level of coverage, including coverage for damage to our cars even though they are paid off - and only pay ~$1600/year in total for all three cars/drivers in Mass, which to me seems pretty reasonable.

[Retric]

The national annual average for car insurance is $2,545 per year for full coverage and $741 per year for minimum coverage.

Massachusetts is a severe outlier in terms of car insurance and your well below the norm. MA averages 1646/person/year vs 3950/person/year in Florida. https://www.bankrate.com/insurance/car/states/#average-car-i...

[nullc]

> can still crash into someone else's $120K car

The significant increases in relatively irreparable high value cars on the road is presumably a driver of increasing insurance rates.

One solution would be to cap liability for damages to other people's cars to the median value of a car on the road. If you own a car worth more than the medium and want/need damage insurance for the full amount, you should take on that cost rather than saddling the public with it.

[orwin]

I think the average cost per year per person in my country is 1500€, so it is actually way cheaper than what i expected for the US.

[tomrod]

> not the driving force behind the cost

Great. Socialize healthcare as the current non-single-payor market is forcing all sorts of market distortions in unrelated markets, AND fix the price fixing. Win win win.

ED: adding clarity for the call for socializing healthcare to dampen the massive price distortions in other markets.

[spencerchubb]

I work in insurance. Most states have a Department of Insurance who approves price changes. Insurance prices are calculated using simple features, such as "If car is from year 2016, then multiply price by x"

However, the numbers are not publicized because they don't want competitors to have that info.

Another fun fact, a lot of people wonder, "Why doesn't an AI startup just disrupt the insurance industry?" It's because the Departments of Insurance have to understand the price formulas. Neural networks are infamously hard to interpret, so we would have to reform regulations before we can use neural nets.

[robocat]

> Why doesn't an AI startup just disrupt the insurance industry?

Also insurance requires that the insurer discriminate a good driver from a poor driver. However they should not discriminate against a protected status.

Good luck setting up a system that can only discriminate using some signals and not others.

It is a good mental exercise trying to think of ways to set up a startup that can discriminate without being obvious about it.

[thwarted]

It's because the Departments of Insurance have to understand the price formulas. Neural networks are infamously hard to interpret, so we would have to reform regulations before we can use neural nets.

I'd like to know that the methodology is understandable and defensable and correctable, and having "an AI startup" disrupt with neural networks isn't going to do that. At best it will just be another excuse used to justify the state of the industry, "the computer said it so it must be right". Reforming regulations so it can be made even less transparent is not the way to go.

[nerdponx]

What's interesting though is that while pricing is strictly regulated, underwriting is significantly less regulated, at least in P&C commercial insurance. Insurance companies have been exploring the use of ML and AI for that task since at least 2017, when I got a job doing precisely that.

Also, things like machine learning for image recognition in claim photos, satellite data, etc. has also been in use for at least the same amount of time.

I believe the Lemonade renters insurance product also does some kind of "AI" claims processing. I wouldn't know what that looks like, my focus when I was in insurance was solely in underwriting.

[phonon]

> the numbers are not publicized because they don't want competitors to have that info.

What do you mean? Pricing is all publically available (sometimes not all the details that feed into the model that create the pricing tables.) You can search SERFF by carrier, by line, by State, and read the actuarial filings.

Most of the time, pricing is refined by looking at prior year(s) losses, and adjusting. You go to the State, explain how much you've been losing, and they review. All that correspondence is public as well.

[wolverine876]

I'm not sure what that means: How does that explain the widespread and large price increases, and the GP's experience?

[tomrod]

> Why doesn't an AI startup just disrupt the insurance industry?

More than this, it's a fundamental misunderstanding of what AI is and what it can do to ask this sort of question.

Best thing I've seen come on the market was Root, based in Columbus and founded by a former Finance director from Nationwide insurance. It used your cell phone to send telemetry signal to classify your driving behavior.

[gzer0]

Shamelessly greedy auto insurers like Progressive and Travelers are raking in record profits and enjoying sky-high stock prices, with Travelers even surpassing a $100 billion market cap, yet they still have the audacity to gouge policyholders with double-digit rate hikes up to 45%. If payouts truly exceeded premiums during the pandemic as these corporate behemoths claimed, how can they now be pocketing their fattest profits ever after the extreme hikes? The simultaneous jackpot profits and outrageous increases in what people pay expose the insurers' justifications as bald-faced lies. The industry giants are clearly bamboozling regulators and customers simply to boost their already-soaring income and profits at regular folks' expense. Their profiteering tactic: fabricated reasons to hike rates exorbitantly no matter what the economic reality [1].

This needs to stop. We need change.

[1] https://www.wsj.com/finance/insurance-companies-profits-stoc...

[tacocataco]

Is there a cheaper insurance company then these two?

[mint2]

The cost is due to the increasing repair costs to other people vehicles, not mainly your own. You also don’t have to get collision and comprehensive coverage, or at least not with a low deductible. Then you’re really just paying for the damage you cause to others and in that case your vehicle cost doesn’t mean anything at all.

Also, not sure your state or credit score but if you’re not in CA you’ll need good credit to get good rates. The only way to change that is government regulation.

Also if you’re getting the same rates from different places, it sounds like you’re being quoted the same company not different companies. If you aren’t going directly to the actual insurance companies website, that’s what’s happening.

[tomrod]

> The cost is due to the increasing repair costs to other people vehicles, not mainly your own.

That doesn't sound right to me. That would mean only the liability component is increasing in cost, but aren't the percentages being applied across the board?

[tpmoney]

Aren't most insurance rates / rate ranges set by the states? And any further variance is down to the actuarial tables? It seems pretty reasonable that most of your quotes would be within a few dollars of each other because they're all insuring the same risk, in the same location, under the same legal framework.

[kirse]

Aren't most insurance rates / rate ranges set by the states? And any further variance is down to the actuarial tables?

If that's true, I certainly couldn't find a table on allowable rate ranges when I did some basic research on pricing and what factors influence it. Certainly open to being schooled on how auto insurance works.

[switch007]

I see lots of people are just parroting insurance PR of “repair costs are up”. I’d love to see the data and see if it justifies the hikes in insurance costs I’d also love to see the average repair cost by part, broken down by whether it’s the insurance company paying or an average Joe privately

[Scoundreller]

People choosing to drive more expensive (and physically punishing in the event of a collision) vehicles is some part of it. But insurance companies like that, so they're not about to include that in their PR script.

[phonon]

Auto insurance pricing is already very heavily regulated, by State. Pricing and underwriting models are public (Search term is SERFF + "State"). The fact is that costs continue to increase for a variety of reasons.

State Farm, for example, lost over $14 Billion last year, mostly from their Auto insurance line. Payments related to losses were 95.2% of the premium they collected, resulting in them having an overall -17% profit margin in that Line.

https://www.carriermanagement.com/news/2024/03/01/259296.htm

[sroussey]

Insurance is based on the cars you may hit that are not your own. Prices have been going up. So not surprised.

[akira2501]

Insurance is based on the coverage I purchase. Are you saying the insurance company is instead selling me an unlimited amount of liability based on the price of _other_ cars and not the $50k of coverage that I selected when I bought the policy?

How is that justified? $50k is $50k.

[seanmcdirmid]

Liability insurance is based on other people’s cars. Comprehensive and collision is based on your own car.

[dylan604]

The price to repair cars are also going up which is making the payout claims cutting into profit margins. So the solution is obvious

[dools]

I wouldn’t be surprised if this was caused by concentration in the under writing market. You might find a lot of insurance companies at a thin retail layer on top of a very small wholesale layer.

[mschuster91]

> I vent my frustration to a few agents about the yearly rate increase insanity and they all shrug, give their non-empathetic "I understand" telephone script and blame it on the "system" calculating the prices and make some useless excuse about inflation.

Thing is, they're not wrong. The cost of accident coverage has gone up, actually way beyond inflation - assume you hit a Tesla and it sits around 9 months until Tesla can be arsed to get spare parts, your insurance will be billed for the damage itself as well as a loaner car for the counterparty. And damage repairs themselves have gotten more expensive as well: what used to be a simple bend that your everyday farmer neighbour could fix with the basic tools in his garage all while being drunk out of his mind isn't even possible with modern cars made from aluminium or carbon-fiber composite, not to mention all the tech like distance sensors that go into modern fenders which has to be replaced and carefully recalibrated.

On top of that come all the issues with regular inflation (e.g. labor cost, real estate rental for shops) and the aftereffects of the covid pandemic and its supply chain shocks (there's still a massive number of car carcasses that couldn't be completed and now get priority in parts delivery).

[1] https://www.carscoops.com/2023/11/tesla-owners-stuck-waiting...

[Scoundreller]

> all the tech like distance sensors that go into modern fenders which has to be replaced and carefully recalibrated

Weren't all those sensors supposed to reduce collisions, your fault or by others'?

[CydeWeys]

I haven't had auto insurance in nearly ten years (because I don't own a car myself), and I gotta say, this is increasingly saving me more and more money over time. Everything about cars in the US is just getting so expensive (including the cars themselves); I wonder when it will start collapsing?

[vkou]

You're not paying to insure the car, you're paying to insure yourself against a crash where you land someone with a 5-million dollar hospital and lifelong disability bill.

The price of a car is trivial compared to the price of a person.

[lotsofpulp]

I don’t think I have seen more than $500k liability coverage, at least not in the drop down menus when shopping for auton liability insurance.

$5M is firmly in umbrella insurance or suing the at fault driver territory.

[nostrademons]

Labor market as well. Many large companies shell out for a salary survey of what other peer companies are paying for similar roles, and then set their wages based on that. That's price fixing. If it were a person calling around to all your competitors and saying "Hey, what are you paying for a senior SWE, we'll pay that too", it'd be illegal.

[nerdponx]

This might be a different form of price-fixing.

You know how big-box retail stores will price match products? That's in order to keep tabs on competitors' prices, and to pose a credible threat of starting a price war. Keeping the peace means keeping prices elevated above marginal cost.

Insurance companies rolling out online rate comparison tools has a similar effect.

[fefefeffffeef]

It sounds like you're ignoring quite a few things. First and foremost that car insurance covers a heck of a lot more than the cost of your car. It can also cover

- the cost of the other person's car

- your healthcare

- the other person's healthcare, including passengers in each car

- damage to other property like buildings and equipment that people drive into

- lost wages if you're too injured to work

- and a lot more.

The cost of a crash can be many times higher than the cost of your car. Of course maybe you only have liability insurance, which frankly is not a great idea and I would recommend getting comprehensive coverage if you can.

[kelnos]

Insurance is usually regulated and prices (and increases) are set and approved by a governmental body, at least in the US.

That's the more likely reason for similar insurance prices from different providers.

[dclowd9901]

Hate to say it, but 1) if your car is involved in just about any kind of accident, it will be considered completely totaled and 2) most cars will be in some kind of accident.

I think the numbers accurately reflect what insurance companies will expect to pay out for claims. It’s partly due to the nature of vehicle design now and partly due to the cost of repair.

[Ekaros]

I wonder if they actually have that much margin to give discounts... Or are the prices already at or near lowest possible level... After all outgoings must be lower than incoming in on sufficiently long term. Has something pushed the pay outs too high, compared to what is being paid.

[jethro_tell]

I'd expect the cost of cars, which is has become tethered to 'monthly payment' instead of actual cost.

[iudusuux]

Not quite right. Auto insurance is a commodity. They don’t have price fixing per the same way housing does. Also they are heavily regulated and their prices probably have to be approved by your state.

[ensignavenger]

As another anecdote, I get very different quotes for auto insurance from different companies.