I know this won’t satisfy you, but it just seems like common sense. Stopping suddenly will risk somebody read-ending you. Of course we can quibble that my 6 AM hard brake with nobody around but a cat shouldn’t count, but unless we constantly record the outside of your vehicle (which in the era of autonomous vehicles seems like a possibility), we can’t know that. Just like we can’t know that you were speeding because somebody was road raging and trying to sideswipe you and you were trying to get to the next exit ASAP.
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OK, common sense tells me that there is an average amount of hard-braking that the average driver, who would be an average risk and have an average premium, would do. Again, no idea how the telemetrics are used actuarially to determine risk. Lawsuit might open up the justification.
And even then, hard braking seems to double-count. Suppose an area (ZIP code) is already a higher risk area. Anyone living there and hard-braking an average amount there would get dinged again. Just for being average.
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If the insurance industry has enough data, all else being average, the driver with an average number of hard braking instances for a high-risk zipcode, will get the average rate for that zipcode - it won’t get double-counted. Alternatively, zipcode may be discarded as a variable altogether, and the driver would get a higher factor for more-than-average hardbraking.
The ultimate rate is determined by the combination of all variables. Multivariate analysis takes into account any correlation between the variables. If they have a strong correlation one may be discarded or a single factor might be determined by a combination of variables (the textbook example often quoted - a factor for each group of younger females, younger males, older females, older males)
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So, it would be OK for someone to sue and the insurer to tell exactly how it uses these data to set premiums?
And other expert witnesses could then refute their process?
Though, I would hope that a state DOI would be doing this prior to approving rates, if that is what the DOI does (some do some don’t?).
Do all state DOI’s have “rate approval” for P&C? I know for worksite Supp Health that’s not the case.
Before the rise in the use of credit scores and fancier modeling for rating/underwriting, if you wanted to know what variables an insurer used in their pricing of personal lines, you could just go down to the state DOI, pull the filings, and see for yourself.
However, as insurers started dabbling with proprietary credit scoring models, and started using the fancier multivariate models for pricing and tiering, some states began to grand trade secret protection to cloak those parts of the filings from view. That was great from the perspective of those of us who like to build better mousetraps…but less great for curious consumers and those of us who like to, um, learn from competitors’ insights.
Gonna guess these data are being used in states where insurers don’t need rate (and rate process) approval. Some state DOIs just want to make sure that the insurers don’t go out of business, cuz it sucks when they do.
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BTW, out of curiosity, I took a look at LexisNexis’ product list for the insurance industry.
Many things in there that I haven’t thought about since left personal lines / credit scoring many years ago.
I found this:
I think this answers my question about whether telematics are now included in CLUE reports. OF COURSE they’d sell that information as a separate product!
BTW, for more ways that Big Brother watches you…
(I don’t work for LN. I’m not in P&C pricing/product any more. Et cetera, et cetera.)
Homeowners and personal auto are subject to rate and form regulation in all 50 states, except for that tiny sliver of the market that is written on a surplus lines basis.
The precise nature of that regulation varies by state, and some states are “better” or “worse” in the extent to which they torture carrier actuarial and legal staff before granting approval (or rejecting) the filings.
When you move away from personal lines, regulation becomes more lax in many states, and some combinations of state, line, and rate vs form are deregulated.
Takeaway here: when deer cross the road, don’t stop for them because that’s a hard brake and will count against you. Assert dominance over the weaker, dumber species; let them know to get off the road and stay off or you will hit them and they’ll pay the price for it.
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Or if you want to minimize your insurance rate, don’t live somewhere where deer are a problem, and/or drive only at times when deer are unlikely to be out and about.
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Hitting a deer does not count as collision so your rates won’t rise as much as braking and getting rear-ended!
Wait, aren’t places where deer are not a problem also places with more traffic? I don’t see much chance of a win here. I do see a compounding potential loss in Fairfax, VA.
(Haven’t been there since 2008 but was surprised to see deer in a relatively urban area.)
I think that any way you look at this…
Car manufacturers, data brokers, and insurers are sitting on some pretty large potential legal liabilities.
This boils down to using telematics by the back-door in order to extract some extra revenue.
Trial Lawyers must be salivating over this one.
American trial lawyers salivate over everything.
I’m more concerned about the regulatory/legislative backlash.
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So true. We don’t need some giant verdict to make insurance more expensive for everyone. Nor do we need unreasonable regulations. For all my posts in this thread, I really just want to understand.
Someone tell the local legislature! Sheeeeesh!
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So … hit all the deer, on the road or off. The more deer hit, the better because that cost gets spread so the cost per deer declines and with enough deer it becomes negligible.
And move the deer crossings to a safer location, for crying out loud!
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I might have to stop the “we are just leaving the house right now and if you don’t stop that messing around back there I am stopping this car to whip your butt” lockdowns that otherwise serve to get the knuckleheads settled.