The auto insurance guide : A Mandate for Mandates
adminIn George Akerlof’s classic 1970 “Lemons” study that launched theacademic study of adverse selection and won him a Nobel Prize (and whichwe discussed in chapter 1), Akerlof focused on health…
The auto insurance guide : EAT YOUR BROCCOLI!
In March 2012, the Supreme Court passed judgment on whether one ofthe most contentious policies for selection markets in U.S. history waslegal. The so-called individual mandate under the Affordable Care…
The auto insurance guide : Up-Front Commitment to Insurance
Short of running off to join a kibbutz, what are we to do? And short ofsetting up for-profit kibbutzim, what else might insurance companies offerthat extracts something that approximates a…
The auto insurance guide : Locking In Good Customers
adminAmy’s insurer could have prevented her from switching plans by lockingher into a multiyear (or at least multi-nine-month) contract. In fact, if youthink about Amy’s little ruse, it seems like…
The auto insurance guide : Waiting for Insurance
adminThere’s a middle ground between offering insurance with so fewrestrictions that high-cost types bankrupt the company and having so manyexclusions as to strip a policy of its insurance value. Instead…
The auto insurance guide : Making a Product That Customers Hate
Free gym memberships—whatever their ultimate purpose—are a nice perk.Many of the ways insurance companies try to make sure they get the “right”customers are less appealing. Indeed, Stiglitz’s apocryphal health insurancecompany,…
The auto insurance guide : Getting Customers to Reveal Who They Really Are
An urban legend that is famous among insurance aficionados (and surely noone else) is that of the health insurance company that deliberately choosesto place its sales office on the fifth…
The auto insurance guide : What’s in the Black Box Matters
Part of the answer may be that even if the public believes higher prices canbe justified by higher costs, the public may have good reason to wonderwhether that’s what’s really…
The auto insurance guide : It’s Not Fair! Pricing Edition
For centuries, people have grappled with the question of what constitutes afair price for a seller to charge for their wares. At the risk of caricaturing adebate that goes back…
The auto insurance guide : Choosing Not to Use the Information You Have
If Amy doesn’t give Allstate access to her car’s computer, the company cannever know how far she drives or how often she slams on the brakes. Butthere are cases in…