I’m wondering. Really. Please tell me. My theory is…
My theory is this: Someone’s car breaks in some manner, but they manage to jury-rig/futz with it enough to get it driveable. I know if I had a major problem, I would still drive it if I could. My dad drove to a gas station a mile from our house backwards because the transmission was messed up. Anything to avoid the inconvenience of a tow truck encounter.
Perhaps, when we do this we are far more likely to get in an accident.
And that would cost the insurance company money.
The actuaries must have worked this out. (Well Brent?)
It’s not the insurance company being nice out of the goodness of their hearts. It’s simple numbers. A cold business decision, nothing else.
At least .. that’s my theory.
Am I being pessimistic?
February 8, 2007 at 10:29 AM
Brent says:
I’m not quite sure, but I’d guess it would have more to do with marketing. It’s got to be fairly cheap for the companies, and sounds like a nice perk to the potential customers. Unfortunately, I’m not a casualty pricing actuary, so I don’t have any relevant work experience with it. I just know on the life side, it seems to be marketing that makes the product decisions, and then the pricing actuaries (not me – I’m an asset & liability management actuary) decide how much to charge…