Pricing insurance is a balancing act.
If you overestimate then your rates will not be competitive.
If you underestimate then you pay out more in claims then you collect in premiums.
As a consumer, I only want insurance if I think they've assessed the value to be lower than what I'd pay out of pocket to 'self insure.' As an insurance company, I want people the opposite, that reality of risk lies lower than what you think it is, so I can make money. I want a bunch of worried low risk people to pay overhead and marginal fees so my margins are frothier.
Also, if an insurance company had perfect knowledge of future claims by being clairvoyant, they could charge a suitable risk premium to write policies where they wouldn’t lose any money, since they would also know how many policies they would be writing.
I don’t think that’s entirely right — the main value add of insurance is to the rare, mind numbingly expensive events — ER visits, crashing into a RR, house burning down, etc. You’re paying to minimize tail risk, including risk you couldn’t possibly self-insure against in reasonable time (my payments to insurance is not going to reach the value of my home — the bet is whether my home will ever burn down).
Regardless, it’s still a conflict of interest in this case
However you want to interpret insurance, there's clearly a conflict of interest that the business based entirely around assessing and managing risk publishes information that risk is higher than people thought and they are therefor more relevant as a business than people thought.
Consider a risk of losing $200 with probability 5% on an asset of $2000. The expected value of the loss is $10. So under your argument, if the insurance company charges over $10, it's worth it to self-insure. But what does self-insure actually mean? I assume it means keep $200 lying around. If you only keep $10 around then you won't have the money to actually fix the problem, and convert a loss of $200 (say, repair costs) to a loss of $2000. Under my values here it would take over 20 years' of premiums to build up what you would need to save to self-insure!
As a consumer, I pay a premium (literally) to get rid of the risk and cap my expenditures. So in my example, there is some price between $10 and $200 where the insurance company can profit and I still come out ahead because I can take $200-P and do something else with it.
Of course, you are still correct that within the $10 to $200 do have an interest in making you believe that the value of the insurance is on the higher end of the range than the lower.
In this specific case where the firm is publishing research they have funded, there are essentially two interests or activities at play:
A. research to determine the extent of solar panel installation performance or lack thereof B. selling financial products based on performance
Since interest B would be negatively impacted by a certain outcome from interest A (a finding that solar installation performance is optimal, in this case), that implies the firm's performance of activity A may have been affected in order to reduce negative impact to the firm overall.
We see this a lot in industry-funded research. Its not unusual. For example, recently a lot of airlines have funded studies about Covid19 spread in airplane cabins. To be published in a reputable journal, researchers are compelled to declare these interests in the cover page of their papers. Also, a good journalist will state this somewhere in their piece (normally at the top or the bottom, conventionally in italics).
To your point about competition and rates, that is really not any part of conventions on declaring interest conflicts in academic research but I'll entertain an argument about it here because I don't think the market forces are as strong as you imply.
The idea that a product will be priced perfectly simply does not apply in a niche market such as this. When you are selling a niche product, the market will not be deep enough to force firms into the behaviour you are describing. This already applies to things as widely held as flood insurance where the market is so shallow, that the federal government has to intervene to make it viable. Solar PV Installation performance insurance (not to mention options) is extremely niche.
I think "conflict of interest" is frequently misused. I was taught it describes situations where one's professional/ethical/legal obligations are opposed, such as an attorney representing competing clients, or a board member approving a contract with a company he is an investor in. I realize this is a semantic point.
In this case, I don't think kWh Analytics has any professional obligation to a standard of science or journalism, so there's no conflict.
In this case the authors probably have the latter but not the former (they're not doing anything wrong legally). "Conflict of interest" is definitely the kind of phrase which has a context-specific definition, so I think semantics is probably more important here than it might normally be.
FWIW, I re-read my above comment and I think came off more hostile than I intended. Your point about pricing insurance is a really interesting one and I think a lot of other commentators had good takes. Specifically, someone mentioned how information asymmetry benefits insurers which is worth considering too.
If they do, then spreading viral stories about the need for their kind of insurance is probably a valid strategy too.
How is it a conflict of interest?