Once insurance companies can accurately predict everyone's risk and then proceed to charge each person accordingly, how is it insurance anymore? The whole point of insurance is to distribute risk evenly over a specific population.
I think insurers should distinguish between controllable and non-controllable factors, and they should not be permitted to discriminate on the basis of non-controllable factors. For instance, if someone chooses to ride a motorcycle instead of drive a car, then there should be a premium for that policy. However, if someone is born with a genome that predisposes them to dying much sooner from a specific disease, they should be charged no more than anyone else, because you can't control your genetics.
I doubt most companies would willingly take the initiative on this though...
With regard to the article's point, not everyone is able to exercise effectively to keep themselves in shape. People with disabilities are not necessarily able to go for a run and should not be penalized financially for being unable to do so.
>insurers should distinguish between controllable and non-controllable factors, and they should not be permitted to discriminate on the basis of non-controllable factors. For instance, if someone chooses to ride a motorcycle instead of drive a car, then there should be a premium for that policy. However, if someone is born with a genome that predisposes them to dying much sooner from a specific disease, they should be charged no more than anyone else, because you can't control your genetics.
Risk-taking behavior, such as choosing to ride a motorcycle, can also be influenced by genetics[1]. How can insurers distinguish 'free will' from genetic disposition?
The point of insurance is pooling the risk of individuals with similar risk profile. If the point was to distribute the risk evenly you would make auto insurance obligatory for people who doesn’t own a car.
Giving resources to people according to their needs is not really insurance’s role. It may be done through taxes, it may be done through “insurance” but then it is not insurance anymore.
Work at insurance company and yesterday had a discusion about it. Conclussions : insurance companies are seeking profits. If it is possible to distinguish bad eggs from good ones they will.
The model you described must be regulated by government. Examples: health insurance (by state) and mandatory car inssurance (by every player on the market) in EU. Each inssurance company must insure every car for a fair price - fairness is regulated by the state.
In many European countries the state provides “health insurance” in the same sense that they provide “education insurance”: they provide a service paid with taxes.
“Fairness” is difficult to define. For example, women paid less for auto insurance in many European countries until the EU decided that this was illegal discrimination.
It is also to distribute cost over time. It may not be positive EV to buy accident insurance (insurance companies make money somehow), but people buy it because they can't handle one time costs that are very large.
To some extent you’re right. Unfortunately as more data about you becomes available, it becomes easier to discriminate against that data. I don’t believe there’s a life insurance company that currently uses genetic testing, but there’s no reason they can’t - the law allows it. Furthermore insurers definitely want higher prices on those with higher mortality - whether genetic or not.
However if you do want to fix this, you can’t do it as an insurance company. Let’s pretend you try - we’re going to charge slightly more than accidental death premiums to everyone. That is - we’re going to blend the health risk into one big number and slather it over all our prices. The problem becomes the free market. Consumers that want life insurance will pick the one with the lowest price. If you’re someone healthy - that means you’re going to skip this new equal opportunity company - it’s more expensive for you! You can get cheaper insurance if someone reviews your medical history and you probably are ok with them doing that. Now on the flip side - if you have a disability, you definitely want this cheap product - it’s cheaper by 10-20x than anything else in the market! So now your pool that you’re spreading risk across is 90-95% high risk and you can’t spread the risk so you can’t even pay out claims - there’s just too much risk for the net premium you are collecting. You’re basically creating a “disability life insurance” and your premiums should have been (to break even) nearly as astronomical as any other company.
For reference, you can currently buy accidental life insurance - it explicitly excludes death due to health conditions. It’s a relatively bad product since most companies will dispute claims - if you have a car accident and die while in the hospital with a heart attack, they will try to prove that you had a heart condition. It’s one of the ways regulation works correctly otherwise - after 2 years with a normal life insurance product, the company is required to pay, by law, even if you lied or omitted something when applying.
Unfortunately in insurance you need regulators to do things like these. It’s why the ACA was required for health insurance. It’s a race to the bottom that no company can stop. Furthermore currently regulations make it very hard to compete on anything except price so there’s nothing you can do to sweeten the pot for the healthy risk to balance the unhealthy risk.
Disclaimer: I’m an engineer at a company that sells life insurance. These are my own opinions though.
Mandating that insurance companies must not charge higher premiums for individuals with genetic diseases will raise the overall cost of premiums for all customers or would at least inhibit any potential for decreases in premiums. So in essence you are saying that - through government force - other people should pay involuntarily for these people. I think it's laudable if you have the desire to help them, and even more laudable if you put your good intentions into action. But I think it's immoral to force people to do so.
Immoral? Is this a variant on a "taxation is theft" argument? (Legally enforced coverage for people with disabilities is reasonably close to taxation and redistribution, I would say.)
It seems to me that if people don't collectively pay extra for people with disabilities or chronic illnesses, then a lot of those people would suffer and/or die young.
Surely contributing to that situation would be far more immoral? Is the freedom for people to spend all of their money as they like really worth more to you?
By this argument, it is immoral to force people to pay taxes in order to support a local fire department. Only subscribers to a particular fire department deserve to have fires put out, and the free market will allow different fire departments to compete for your business.
This might be arguable if everyone lived in well-separated domains where there is no significant risk of fire spreading from one to another, but that is not the case for the vast majority of people.
If your morality doesn't work in the real world, it's not a good one.
> The whole point of insurance is to distribute risk evenly over a specific population.
First time I've seen that line, and it doesn't make much sense to me at all - in my mind insurance has always been a hedge against risk. If my family needs a million dollars to live well if I die, and my probability of death this year is 0.1%, $1000 is what I'd pay for life insurance. The art is calculating the probabilities correctly, and maybe adding a small fee for the trouble, but anyone with the capital could offer insurance even for a single customer, no?
If you are insured, your probability of death is probably greatter than when you are not insured. Even not considering murder, you will probably take more risks if you know your family is protected.
The fact that someone can do that doesn't change the social function of the actual thing.
Actually, that is essentially how an insurer gets started. Obviously, you can't start selling insurance to your first customer if you can't pay them out the next day if needed, so you need some capital to get started. And once you have the risks figured out, there really is no reason why you shouldn't keep selling insurance to the next ten customers as well. And the next thousand customers. And the next ... --well, the point being, if you have done your math right, you are now distributing the risk evenly, with some profit margin for you.
Doing enough sports to make your fitness tracker happy is definitely a controllable risk factor for almost everybody. I'd expect people with disabilities that prevent them from exercising to pay higher life insurance premiums.
As much as I’d like everyone to use a wearable health/fitness tracker; I’m not sure I’d like insurers to get everyone to do it and collect everyone’s health data. Isn’t that the classic scenario of data collection overreach?
You are absolutely right but the problem started with the company selling the tracker [1]. The original reason why wearables and health trackers work in the cloud is because they are tiny and don't muster the resources to have everything within the device; hence thin client. However, smartphones work reasonably enough to have the data hosted there. Convenience of convergence? Then why isn't the data stored with zero knowledge principle? With smart speakers it seems the same story. Why not host an offline Wikipedia, have speech analysis, and have the device work offline 24/7 as long as its killswitch is disabled? Furthermore, what we need is a standard to self-host (such as Yunohost. OTOH, many homes are worse secured than clouds.
[1] We need legislation to make the practices illegal, or hold these people accountable, not in the least in case of data breaches. That's just the top of the iceberg.
You see, the problem is that people universally accepted "the cloud". When Alexa first appeared it was beyond me why anyone would buy. Turns out Amazon's marketing worked so well it's now a standard household item in many homes. The constant calling home by all Android phones is another example - we learned how to live with it. Health data tracking seems just another tiny step. Until people revolt against this huge issue, there is no way things change as greed has no limits as history shown us.
Just have the tracker store the data locally and sync with your phone or computer via a cable or bluetooth. "The cloud" was never necessary unless you eventually want to monetize the data. In fact it doesn't make sense for the manufacturers to provide that infrastructure unless they plan on getting money out of it. It's not like servers come for free.
Vitality policyholders worldwide live 13 to 21 years longer than the rest of the insured population.
I'm skeptical here. This data point suggests to me "Rich people who can afford cutting edge technology and who also probably have been well cared for their entire lives naturally live longer and are the early adopters of this type of insurance involving fitness trackers. From that, we are extrapolating that fitness trackers cause longevity." It's a tail wags the dog type inference.
Also, when I was in insurance and they had a wellness benefit on policies, I was initially jazzed that they were moving in the right direction of promoting preventive medicine, yadda. Then I learned that the actual point of the wellness benefit was that it gave people a small payout annually and this improved customer retention. That's it. Actual welfare of the customer had nothing whatsoever to do with it.
Disclaimer: I worked in insurance for over 5 years at a highly ethical company and ended up with a pretty negative opinion of the industry as a whole.
For future reference: this article, and specifically it's title is deliberately misleading to form the general impression of "mandatory tracking", so that they get clickthroughs.
From the horse's mouth:
| John Hancock Vitality Life Insurance now offers new and existing* customers two options to support and incentivize healthier choices, wherever they are in their wellness journey:
| Vitality GO: Vitality GO will be offered on all life insurance policies, at no additional cost. With this basic 'be healthy' version of the program, consumers will have access to expert fitness and nutritional resources and personalized health goals through an easy-to-use app and website. And as they reach key milestones, their healthy activities will be rewarded with discounts at major brand outlets.
| Vitality PLUS: For $2.00 a month 5, customers will receive all the benefits of the John Hancock Vitality Program, including savings of up to 15 percent on annual premiums and valuable rewards for the everyday things they do to stay healthy, like exercising, eating well and getting regular checkups.
I have a fitbit (and have owned several different models). You can easily score a lot "steps" by air-drumming, so it shouldn't be hard to make it look like you are very active.
It would of course be pointless to have a fitbit if you cheat, so in practice it is going to be a small number of steps that miscalculated, so it is fairly accurate, but that changes once I get a bonus for hitting 10k steps.
Obesity is the #1 killer in America. Charging people more who are intentionally harming themselves with poor diet and bad exercise habits is both ethical and fair; to the people who are out of shape, and the people that are in shape [subsidizing the former's health costs].
Readit News
I think insurers should distinguish between controllable and non-controllable factors, and they should not be permitted to discriminate on the basis of non-controllable factors. For instance, if someone chooses to ride a motorcycle instead of drive a car, then there should be a premium for that policy. However, if someone is born with a genome that predisposes them to dying much sooner from a specific disease, they should be charged no more than anyone else, because you can't control your genetics.
I doubt most companies would willingly take the initiative on this though...
With regard to the article's point, not everyone is able to exercise effectively to keep themselves in shape. People with disabilities are not necessarily able to go for a run and should not be penalized financially for being unable to do so.
Risk-taking behavior, such as choosing to ride a motorcycle, can also be influenced by genetics[1]. How can insurers distinguish 'free will' from genetic disposition?
[1]https://www.nature.com/articles/s42003-018-0042-6.pdf
A "biological bias" might make the choice harder, but they're not suddenly deprived of free will.
Giving resources to people according to their needs is not really insurance’s role. It may be done through taxes, it may be done through “insurance” but then it is not insurance anymore.
The model you described must be regulated by government. Examples: health insurance (by state) and mandatory car inssurance (by every player on the market) in EU. Each inssurance company must insure every car for a fair price - fairness is regulated by the state.
“Fairness” is difficult to define. For example, women paid less for auto insurance in many European countries until the EU decided that this was illegal discrimination.
However if you do want to fix this, you can’t do it as an insurance company. Let’s pretend you try - we’re going to charge slightly more than accidental death premiums to everyone. That is - we’re going to blend the health risk into one big number and slather it over all our prices. The problem becomes the free market. Consumers that want life insurance will pick the one with the lowest price. If you’re someone healthy - that means you’re going to skip this new equal opportunity company - it’s more expensive for you! You can get cheaper insurance if someone reviews your medical history and you probably are ok with them doing that. Now on the flip side - if you have a disability, you definitely want this cheap product - it’s cheaper by 10-20x than anything else in the market! So now your pool that you’re spreading risk across is 90-95% high risk and you can’t spread the risk so you can’t even pay out claims - there’s just too much risk for the net premium you are collecting. You’re basically creating a “disability life insurance” and your premiums should have been (to break even) nearly as astronomical as any other company.
For reference, you can currently buy accidental life insurance - it explicitly excludes death due to health conditions. It’s a relatively bad product since most companies will dispute claims - if you have a car accident and die while in the hospital with a heart attack, they will try to prove that you had a heart condition. It’s one of the ways regulation works correctly otherwise - after 2 years with a normal life insurance product, the company is required to pay, by law, even if you lied or omitted something when applying.
Unfortunately in insurance you need regulators to do things like these. It’s why the ACA was required for health insurance. It’s a race to the bottom that no company can stop. Furthermore currently regulations make it very hard to compete on anything except price so there’s nothing you can do to sweeten the pot for the healthy risk to balance the unhealthy risk.
Disclaimer: I’m an engineer at a company that sells life insurance. These are my own opinions though.
It seems to me that if people don't collectively pay extra for people with disabilities or chronic illnesses, then a lot of those people would suffer and/or die young.
Surely contributing to that situation would be far more immoral? Is the freedom for people to spend all of their money as they like really worth more to you?
This might be arguable if everyone lived in well-separated domains where there is no significant risk of fire spreading from one to another, but that is not the case for the vast majority of people.
If your morality doesn't work in the real world, it's not a good one.
Dead Comment
First time I've seen that line, and it doesn't make much sense to me at all - in my mind insurance has always been a hedge against risk. If my family needs a million dollars to live well if I die, and my probability of death this year is 0.1%, $1000 is what I'd pay for life insurance. The art is calculating the probabilities correctly, and maybe adding a small fee for the trouble, but anyone with the capital could offer insurance even for a single customer, no?
Actually, that is essentially how an insurer gets started. Obviously, you can't start selling insurance to your first customer if you can't pay them out the next day if needed, so you need some capital to get started. And once you have the risks figured out, there really is no reason why you shouldn't keep selling insurance to the next ten customers as well. And the next thousand customers. And the next ... --well, the point being, if you have done your math right, you are now distributing the risk evenly, with some profit margin for you.
[1] We need legislation to make the practices illegal, or hold these people accountable, not in the least in case of data breaches. That's just the top of the iceberg.
I'm skeptical here. This data point suggests to me "Rich people who can afford cutting edge technology and who also probably have been well cared for their entire lives naturally live longer and are the early adopters of this type of insurance involving fitness trackers. From that, we are extrapolating that fitness trackers cause longevity." It's a tail wags the dog type inference.
Also, when I was in insurance and they had a wellness benefit on policies, I was initially jazzed that they were moving in the right direction of promoting preventive medicine, yadda. Then I learned that the actual point of the wellness benefit was that it gave people a small payout annually and this improved customer retention. That's it. Actual welfare of the customer had nothing whatsoever to do with it.
Disclaimer: I worked in insurance for over 5 years at a highly ethical company and ended up with a pretty negative opinion of the industry as a whole.
From the horse's mouth:
| John Hancock Vitality Life Insurance now offers new and existing* customers two options to support and incentivize healthier choices, wherever they are in their wellness journey:
| Vitality GO: Vitality GO will be offered on all life insurance policies, at no additional cost. With this basic 'be healthy' version of the program, consumers will have access to expert fitness and nutritional resources and personalized health goals through an easy-to-use app and website. And as they reach key milestones, their healthy activities will be rewarded with discounts at major brand outlets.
| Vitality PLUS: For $2.00 a month 5, customers will receive all the benefits of the John Hancock Vitality Program, including savings of up to 15 percent on annual premiums and valuable rewards for the everyday things they do to stay healthy, like exercising, eating well and getting regular checkups.
https://www.johnhancock.com/news/insurance/2018/09/john-hanc...
Correct article title is here: https://news.ycombinator.com/item?id=18027323 "John Hancock will include fitness tracking in all life insurance policies".
And with that, reuters.com enters into my HN blacklist.
It would of course be pointless to have a fitbit if you cheat, so in practice it is going to be a small number of steps that miscalculated, so it is fairly accurate, but that changes once I get a bonus for hitting 10k steps.