Want to be an actuary? Odds are, you’ll fail the test | Hacker News Reader

Want to be an actuary? Odds are, you’ll fail the test

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154 pointspondsider338 comments

One of the most frustrating aspects of the process is that once outside of insurance/insurance-adjacent industries, the credentials are useless. I have my FSA (fellowship of the SOA) and CERA (chartered enterprise risk analyst) from the SOA. I no longer wanted to work in insurance and left for data science. I felt the need to obtain a graduate degree to feel qualified enough for the data science space. My Master's degree was a cake-walk compared to the actuarial process but that is what my peers care about, and I always feel not quite at the same level as my peers with PhD's.

It's even more constrained than my experience. The U.S has two actuarial governing bodies: the CAS and SOA - the former handles P&C, the latter just about everything else (life, health, retirement). The two organizations hate each other and it's almost impossible to get a respectable job in one industry if you have the wrong credentials. What makes it even more crazy is that the two orgs have the same exact first couple of qualifying exams.

My advice has always been: only consider dedicating your time to these exams if you're highly certain this is the career you want. The pay isn't as great as it once was, you're constrained to legacy industries, the process is as time-consuming as a PhD without getting the respect that comes along with it, and you need to decide early on which area of insurance you'll want to practice.

You came to the right place if you want to disrupt things with a startup.

I'm not sure there's much to disrupt in that industry.

> you're constrained to legacy industries

Is insurance really a legacy industry?

The incumbent companies in that space are.

They are a strong candidate for greatest technological backwater.

The incumbent insurance companies maintain their position in the market through having large amounts of capital which lets them ultimately offer lower premiums than a new competitor entering the market which may have less capital. This means the legacy insurance companies don't need to prioritise investing in innovation to maintain their position, hence the old companies stay around.

Also, insurance just doesn't have much interesting space for innovation.

In life insurance, for example, products other than simple term insurance really shouldn't exist. They're mostly just Rube Goldberg tax sheltered savings accounts for the wealthy.

In theory there ought to be some opportunity in the area of incentivizing people to improve their health behaviors. But carriers have been much slower to move on that than to futz around with the latest financial engineering and tax avoidance techniques.

I tried to buy decreasing term life insurance, where the benefit decreases continuously over 20 years, matching the needs of my family. I consulted with several agents and none of them could sell it to me. The best they could do was to divide the term into three time periods with different benefit amounts.

One agent told me that most customers drop their policy after a few years. The companies earn most of their income from the initial periods of policies, when payouts are rare.

I applied for term life insurance at 3 or 4 life insurance companies, and they all allowed you to reduce the benefit amount a few times over the term.

Not every year, but they said it was no problem if you wanted to halve the benefit halfway through or even a second time after that (and they would lower the premiums commensurately of course).

I have Principal and Protective in the US.

Your comment is essentially "me too". That's not interesting.

You are right, I was too quick to interpret the first time and thought you wrote that the best they could do is sell you three different policies that you cancel whenever you want to drop that benefit amount.

There's a startup that will do this but I don't know if you'd want a policy with a startup.

Please share a link. And in the future, try to share links or at least names of things you tell people about. If you can't find the link or name, then say so. I think saying only "the thing you want exists" is a little rude.

No thanks, not after that display of attitude.

Scolding people for not giving you more than they already gave you for free is a behavior that will never get you what you want.

Update: eh, I'm in a good mood today so I'll tell you the name, it's Ladder. No link though. You may Google it as penance for being annoying.

To save others the search: https://www.ladderlife.com/

Are you sure that Ladder offers decreasing benefit insurance? I looked all over their website and found nothing about decreasing benefits. The name "Ladder" might imply the technique, called "laddering", of buying multiple policies to achieve decreasing coverage.

In the spirit of saving the search - yes, it does offer the ability to decrease coverage as needed, with premiums decreasing by the same percentage as well (i.e. if you decrease benefit by half, premiums decrease by half, too).

Here's a link if it's helpful! https://www.ladderlife.com/laddering

Term life insurance is basically just a put option on your life with an expiration a couple decades out.

Whole life on the other hand is actually buying equity in your presumptive future earnings. It's considerably more capital intensive, but less expensive overall in most cases.

I don't know anyone outside of a heavily commissioned life insurance agent who thinks whole life is a good deal. You're flushing massive amounts of money down the toilet in the form of agent commissions and other fees. It's just another tax shelter for the wealthy, after they max out more attractive alternatives.

This article sums it up for me: https://www.nerdwallet.com/article/insurance/is-whole-life-i...

You're not wrong, but from the very good article you linked:

> I think only the top 20% of income earners should consider whole life. Term insurance is cheaper and is almost always the best type of insurance for 80% of the nation.

Many of the readers of this site fall into that 20%. If you're working at SV rates and aren't maxing out your 401(k) you're assuredly doing it wrong. If you are and want to save more, then whole life is an option worth researching.

Regarding life insurance product offerings: disability insurance is often advised by consumer protection groups for young professionals, who crucially depend on future income.

Regarding savings products, nothing wrong IMO, with tax subsidizing a "consume later" mentality, if the products are cost-effective.

Could this be one of the few cases where a DAO actually has a real world application?

Maybe, the insurer would still needs a claims-handling staff overhead to verify a claim made is valid. And perhaps also an underwriting team to assess the risk before the start of a policy. The DAO could replace the paperwork/emails, but I imagine that is only a small expense.

I liked watching these videos from Ostaszewski

https://www.youtube.com/watch?v=Jc335qIQZgg

https://math.illinoisstate.edu/actuary/faculty_staff/

https://math.illinoisstate.edu/krzysio/pass.html?_url=%2Fpas...

Qualified actuary here also from UK. You're right about insurance being a legacy industry. In terms of the exams, if you can pass A-level maths, you can pass the actuarial exams. I found the main reason they were considered hard is not because of the subject matter, but due to the amount of content that had to be learned in a short space of time.

And the esoteric notation!

> Insurance is legacy

why it’s hardly getting superseded at least for car, home, medical, life, injury , income and travel

Actuarial ppl shouldn’t really care if it’s run on mainframe not k8s (if that’s the reason)

The fact that its day-to-day application it is “legacy” is probably a good thing, as reinforced concrete is already “legacy” in tha sense or stailess steel.

Based on the question in the article the skills you get from this would carry over.

The fundamentals of actuarial science: probability, time-value of money, and tail-risk have absolutely benefited me. I do gripe that much of the material is out-dated. I sat for all my exams within the past 15 years and (for example) we had a lot of option pricing models that have been archaic since the 90's and no machine learning (material has been updated with ML, but it constantly feels a couple decades behind).

The ML skills update was a very basic update. Proper ML skills take a long time to learn and can't be taught through an exam, the material for which gets forgotten very quickly afterwards.

The exams have two ultimate objectives:

1. Perpetuate the actuarial guild

2. Shovel money from aspiring actuaries and insurance companies into the SOA's coffers

They aren't really, and aren't really meant to be, a marker of general, transferable intellectual skills or achievement outside the insurance industry. So it's not surprising that no one other than the parties involved (the SOA, aspiring actuaries, and insurance companies) recognizes them as a meaningful credential.

Seems like the association should do a, you know, risk analysis on what will happen if these trends continue.

In India, I feel the same about Chartered accountants and Lawyers. Not trying to dismiss their knowledge and expertise, but it is crazy the amount of stuff you can do yourself in this day and age but still need their signature. Low key I feel the same about some of the lower skilled Doctors too, although it is a very different ball game risk wise.

This is the same model of all licenses, which is inherited from the guild system common throughout all of human history (the government (monarchs, oligarchies, democracies) protect favored industries from competition).

I put them on a spectrum:

- Licenses that anyone can obtain by showing the requisite skills. This is the least nefarious, and the clearest example would be driver's licenses. In a perfect world anyone can apply for and receive a driver's license. It gets corrupted by requiring training from other state-approved schools, but in its purest form it achieves, "If you can pass the driver's test, you get a license." Interestingly enough even advanced degrees sometimes achieve this goal - in California anyone can take the bar exam and get licensed to practice law without ever attending an accredited law school. Every other state requires you to attend law school (and the required cost / debt) before getting licensed.

- Licenses that you can obtain only after attending approved schools. This would be doctors, dentists, accountants, and nearly every lawyer (see above). The filter for the guild is getting into the approved school. If you manage to get accepted into and complete the program, you will succeed in getting licensed based on raw intelligence (meritocracy). The primary filter that protects the guild is getting into the approved schools (although there exists a subset of people who make it into school and fail the license exam, most commonly in law).

- Licenses that anyone can get, but require some absurd amount of hours of training, which usually costs absurd amounts of money that achieves nothing and are government mandated because of various entities that lobby politicians. These would be all of the blue-collar guilds like hair stylists, interior decorators, and being a florist in Louisiana (seriously - https://www.kplctv.com/story/37848470/requirements-for-louis...). You can learn the basics of hygiene and sweeping hair in a 60 minute youtube video, but the 1000 hour requirement in a for-profit cosmetology school in Massachusetts (https://www.mass.gov/service-details/how-can-i-become-a-cosm...) is absolutely absurd, especially considering becoming an EMT - someone that literally saves lives and gets dying people to hospitals - is a $950 six-month part time program (https://www.boston.gov/departments/emergency-medical-service...). Even worse, very rarely these licenses are transferrable between states, making the blue collar employee both indebted and chained to a particular area.

- Licenses that anyone can get, but are purely graded on a curve in order to protect existing members. Finally we get to the actuarial licenses! Similar licenses would be Michelin star restaurants and wine sommeliers. Only a very small community appreciates these licenses, but the value to those that have them is high via the artificial scarcity. In order to keep them fair they offer the test(s) to anyone, but grade on an absurdly difficult curve to make them essentially random, and then take only the top scorers to preserve their scarcity. The process to get the license is to cram test exams ad infinitum and continue to take the test until you randomly get the top score. They ultimately mean nothing, at least compared to the amount of people who deserve the license vs. those that have them.

In summation, licenses are an atrocious relic of a bygone era, but because of economic incentives they live on in a variety of forms and have little chance of ever being eliminated.

Addendum - occasionally I will see an HN poster asking why there isn't some sort of certification or license for software engineers (perhaps in some countries these exist, but not in the USA where software engineers are the top-tier of salaries across all industries). My argument against this is that the lack of licenses is exactly why US tech companies dominate the world - anyone can succeed whether they are an ethnic or sexual minority, autistic / neuroatypical, paraplegic, etc. can learn to code and make an impact - and at any age! Licenses mean nothing to technology, and the moment they appear is a signal that something significant has changed and the industry in that country will collapse when compared to all the other countries that don't artificially restrict talent.

Nominate parent for best of HN2021 award

> Licenses that anyone can get, but are purely graded on a curve in order to protect existing members. Finally we get to the actuarial licenses! Similar licenses would be Michelin star restaurants and wine sommeliers. Only a very small community appreciates these licenses, but the value to those that have them is high via the artificial scarcity. In order to keep them fair they offer the test(s) to anyone, but grade on an absurdly difficult curve to make them essentially random, and then take only the top scorers to preserve their scarcity. The process to get the license is to cram test exams ad infinitum and continue to take the test until you randomly get the top score. They ultimately mean nothing, at least compared to the amount of people who deserve the license vs. those that have them.

If I follow you correctly, this last category is basically all "competitive examinations"? I wouldn't be so quick to dismiss them (maybe that's because I live in France, where competitive examinations are the third national pastime, just behind moaning and striking).

Michelin stars for example are supposed to distinguish the best restaurants, so of course they're going to be competitive! Would you complain that we only give three Olympic medals per event?

These competitions can be useful in case of limited availability (e.g. number of places every year in an elite engineering college), but also just as a signal that you're dealing with the best of the best. For example, if you go to a Boulangerie held by a "Meilleur Ouvrier de France", you know you're going to get some of the best croissants in the world.

> These competitions can be useful in case of limited availability (e.g. number of places every year in an elite engineering college), but also just as a signal that you're dealing with the best of the best.

When you're dealing with actuaries, you're definitely not dealing with the collective "best of the best" (although individuals may happen to be excellent). You're dealing with people who were willing to memorize and practice and grind a very specific set of exams because they had no other options or didn't want to do anything else.

I would argue that there should be way more Michelin-star restaurants than exist, but they artificially cap the supply to keep them rare. It's a form of the same thing.

I think there's an incentive system at work that I'm not sure I've seen articulated before. If the people controlling a rating system want the best ratings to be rare, they will often have to resort to a combination of opacity, arbitrariness, and fine distinctions that are largely meaningless to the consumers of the ratings. Because True Quality can't be reliably recognized by some ratings committee... and yet, they must rate.

A Michelin star rating is not a license. It has no legal force. It's simply a restaurant review, like you can read in any newspaper. Some consumers choose to trust Michelin reviews more than other sources.

Indeed, just like an olympic medal. The MOF is a better example IMHO

Licenses actually mean a lot and are integral to many industries. Software isn’t traditionally regulated because society still doesn’t understand the danger of defective software.

Buildings, electronics, phones/radios, vehicles, food, medicine, and serious industries are all licensed.

Some software is dangerous, like airplanes and medical software that aids in live surgeries. But the majority of software is not dangerous. You shouldn't need to be licensed to make a video game or browser extension.

Actuarial credentials aren't licenses. In the United States, they confer no privileges aside from the ability to sign a particular statement on the condition of a company's loss reserves. This is something that few actuaries will ever need to do.

Actuarial credentials are instead a market-based signaling mechanism, akin to a specialized technical degree. All signaling mechanisms are imperfectly correlated to whatever it is they're signaling for, but in my own experience, it's usually a good bet that an actuary who holds a credential will be more capable than one who doesn't. The market agrees and pays credentialed actuaries a premium. If credentials stopped being an excellent predictor of ability, there would be nothing stopping the market from disfavoring them. Note that there's one highly successful insurance company (Progressive) that has made this call and hires very few actuaries. Most companies wouldn't be able to follow their operating model, but that's a different conversation.

And if the actuarial societies and insurance companies are trying to preserve scarcity of actuarial credentials, they're doing a poor job of it. The test-taking process continue to be well-supported by insurance companies. Junior actuaries typically have all exam expenses paid and are given an additional 25 to 30 extra days off per year to study for exams. The number of credentialed actuaries has exploded (I think more than doubled) in the past decade. There are no quotas and no economic barriers after you get your first job.

I do like your comparison with Michelin-star restaurants. Michelin stars are a signifier of quality. The letters after my name are too.

But are they not actually markers of transferable skills? I have worked in insurance, but not as an actuary, and my impression was that actuaries generally do have skills that are broadly useful in data science. Why shouldn't the actuarial exams count for something on other job applications?

I've also worked with actuaries and my impression has been different. Some of them have some skills, but it's very hit-and-miss, and it's not clear to me that the average actuary would compete with the average Master's in Data Science / Stats / CS in terms of effectiveness as a data scientist.

Their big weakness is computational/programming skills. Many of them are simply unable to function outside of Excel.

The SOA is trying to remedy this with new exams (of course) but my impression is that it's too little too late.

this is true — as an analyst, I was severely reprimanded for writing data cleanup scripts since they couldn't be reviewed in vanilla Excel

Incredibly depressing. I hope you got out.

I think it’s an unfair comparison. Of course the average actuary wouldn’t even come close to the average days scientist when it comes to data science skills.

Just like the average doctor wouldn’t, the average lawyer wouldn’t, and the average banker wouldn’t.

The problems they solve require very different skills. The problems I solve on a day to day basis have no need for data science. There are certain areas in my company where we use data science heavily, but in the areas we do need to use it we just use actual data scientists.

The SOA, in my opinion, is going down the wrong path. Actuaries shouldn’t be trying to compete with data scientists. It has such little relevance to the work of most actuaries and in my opinion it’s just a way for the SOA to try and increase their revenues by jumping on a bandwagon.

I agree with you “hit and miss” observation though.

The exams are a barrier, but they’re not perfect. Plenty of mediocre people slip through the net. My company has roughly 100 actuaries. There are maybe 10-15 people that I’d consider very good at their job. The rest are just “meh”. I suspect this is the same in most fields though. Most companies now seem to have some sort of “data science” function. Unless the company is a tech or “data is the product” company, those data science functions don’t seem to contain the brightest data scientists. A friend of mine is a data science lead at retail company, and he’d be the first to admit he’s fairly mediocre. Most of their challenging work is outsourced to a specialist consultancy and their in house staff barely do any actual “science”.

The question was about whether actuarial credentials should be positive signals in an application to a data science job. And my answer is: all else being equal, having more credentials is arguably good. However, all else is not equal. Having invested in actuarial credentials is a fairly strong signal of very limited computational/programming skills which are critical to a data science career. So the net signaling value of actuarial credentials in data science is actually negative.

I'm well aware that data science is as awash with mediocrity as any other field, but not being able to function outside of Excel makes you mostly useless as a data scientist, not merely mediocre.

I also agree with you that actuaries should not compete with data scientists, and should mostly stick to product, actuarial finance, reserving, etc. unless they desperately want to do data science, in which case they should switch to data science.

> in my opinion it’s just a way for the SOA to try and increase their revenues by jumping on a bandwagon.

It's worth noting that this is exactly what you'd predict if you buy my original thesis about the exams.

I agree completely with your last paragraph. If I wanted to be a data scientist I’d be a data scientist. I don’t want my actuarial organisation wasting time and money trying to market us as “data scientists” when we are not data scientists. It’s a completely different job. It’s almost comparable to the profession deciding that we should now market ourselves as lawyers because we also contribute to writing contracts and treaties.

I would argue though that being an actuary doesn’t automatically make you bad at anything outside of Excel.

I’m not a data scientist, but I’m sure if I decided to go down that route my skill set would put me in a good position.

I have a very good grounding in statistics and probability.

I use R/Python quite heavily, regularly building models from scratch. I work with GLMs, Copulas, Monte Carlo simulation etc.

I deal with big volumes of data and have to write efficient algorithms to deal with it.

Most of my skills didn’t come from the exam path, but doing the exams also didn’t make me bad at all those other things.

Just being an actuary obviously doesn’t mean you have those skills though, which is what I was getting at with my “hit and miss” comment.

> I would argue though that being an actuary doesn’t automatically make you bad at anything outside of Excel.

I agree, I just think it's statistically a net negative signal if conditioned only on years of experience. I would expect a generic technical BS or MS in a DS-relevant field to be more qualified than someone who passed actuarial exams, if the two are at a similar point in their careers.

That said, competent employers shouldn't be relying on unconditional signals, they should be interviewing and testing and getting more information on the candidate. For such employers, the signaling value of the actuarial credential ought to be neutral.

Keep in mind that the actuaries who apply for data science jobs are a heavily self-selecting subset. Among the candidates who apply for data science positions, I think actuarial credentials are a strongly positive signal on business acumen (especially but not only in insurance) and a weakly positive signal on quantitative skills relevant to the generic technical BS or MS degree holder at the same level of experience.

I agree that the median actuary would do poorly in data science, mostly because they don't have the programming ability for it. But the median actuary isn't trying to be a data scientist, so that's not who you care about if you're hiring for a data science position.

Interesting but hasn't been my experience. I find that actuaries going into DS are what you'd naively expect. They know the stuff that's tested on the exams but have underdeveloped DS skills compared to other quantitative types at the same career stage, especially in coding. I would definitely not describe them as strong in business acumen.

Anecdotally, most of the people I’ve known who’ve switched out of actuarial to data science haven’t been the best.

In most cases it’s been people who couldn’t pass exams, or were missold on what actuarial work actually involves and ended up moving early in their career when they wouldn’t have strong business acumen at all.

The one person who made the switch who I would consider a good actuary went back and did a masters in data science and applied for entry level roles. He had a couple million in the bank and decided he could afford to start over again.

He’s doing well now, he’s in a relatively senior position at a tech company. Financially he’s worse off than he would have been if he continued down the actuarial path, but he enjoys data science work a lot more than his old job and isn’t limited to insurance/pensions/finance.

> The pay isn't as great as it once was

Not to mention there aren't that many entry-level openings so you don't get much choice on where you live after college

I’ve hear actual certification held out as a decent alternative to requiring a degree for everything.

I’ve also seen similar complaints from lawyers: you’re basically stuck in whatever state you passed the bar exam in.

When I left high school I loved maths and stats, so I started a degree in Actuarial Science. Was totally bored by it by the end of first year - could not be motivated at all by it. There was no semblance of problem solving, it was primarily just applying a few types of formulae to a situation. Sometimes normalizing some input, sometimes adjusting something in a tiny way - but essentially the same stuff over and over again. Looked at past-papers for years 2 and 3, and it didn't any more interesting. I realized towards the end of first year that the idea of doing an entire degree and then 4-10 years doing board exams just seemed a sort of narrow path to take - few alternatives to swap to once you go too far. Ended up changing to Computer Science.

In this [1] interview by Barry Ritholtz, Markel CEO essentially told the origin story of an insurance giant. Basically a family member was a lawmaker, passed a law that drivers of the newly invented cars (maybe horse buggies?) must be insured. They simultaneously started a company that sold insurance. Over time they learned to make money from investing their customers capital.

It blew my mind at how candid he was about the fact that his business exists due to regulatory mandates. Are there insurance products that people are really satisfied with and trust will pay out in case of event X? I feel like I’m self insuring when it comes to car and healthcare at least. Title insurance when buying a house also seemed like a total “legally required” joke.

[1] https://ritholtz.com/2021/11/transcript-thomas-gayner/

> It blew my mind at how candid he was about the fact that his business exists due to regulatory mandates.

This is extraordinarily well understood in the insurance industry. They don't think of it as odd or a dirty secret, at all.

It's more surprising that he was so open about the naked corruption/nepotism in the origin story. Apparently there's a sector of society for whom that is also normal and acceptable.

> I feel like I’m self insuring when it comes to car and healthcare at least.

This is not at all the case for car insurance! You may be self-insuring the cost of your car, but are you also self-insuring against a lawsuit for damage to the other guy's car?

It's definitely more true than not for healthcare, though. Health insurance is a pretty terrible product.

Agreed; but I don't see it as necessarily nefarious (only probably nefarious:)

In a lot of places, most people only wear seatbelt, wear a helmet, don't drink and drive, etc due to laws/regulations (and in others, they'll strongly actively fight these initiatives). We are really really REALLY bad, on average, assessing personal risks. Regulation, in part at least, is us as a society taking look at overall percentages and saying "well let's not do that".

There's a likely apocryphal story about sysadmin who was fired after event he estimated had less than 10% chance of happening, happened. Most of us assume that <50% means it won't happen, >50% means it will happen. With most events that insurance covers, most of us are aaaaawful at understanding it can ever happen to us... and we most definitely over-estimate the gracefulness, self-awareness and ownership we'll exhibit if it does help us.

> Health insurance is a pretty terrible product.

What's the alternative?

Health insurance is a terrible product because it is usually not insurance at all.

If you are an alcoholic with a history of OWI/DUIs and you have a pre-existing car accident and no job, no one expects you to get free car insurance paid for by the government that will fix your already damaged car and make sure you can drive again as a human right.

In Healthcare, we assume that product should exist and we demand that it be called insurance for some reason.

The alternative to health insurance is free Healthcare. It isn't insurance at all.

I believe you're arguing semantics. If we're being strict about the definition of insurance, we should also be strict about "free healthcare". There's no such thing. Somebody has to pay for it. If it's the government, they do so using money collected from their citizens. You can call it premium, tax, payment - it doesn't matter. At its core it's a system of distributing risk - which is insurance.

In my mind, the alternative to health insurance is paying market rates out of your pocket for everything. It's not a good idea and that's why most of the countries have universal health insurance coverage.

A single payer system?

Or a hybrid system with Medicare for all with income limits, above which you must either get third party insurance or pay a small tax is how it was done in Australia last time I was there. It seemed to work well when I was there, and I did have need of it. I had to go to the ER when I was peeing blood after being kicked by a horse directly in the kidney. Fortunately there were no blood clots and it passed after a day or two, but they had to do tests to verify it all and also an MRI I believe. I never got a bill.

I had more medical expenses from mandatory screening fees for visa applications there than from a potentially life threatening medical emergency. And it was included in my yearly taxes with no fees at the point of usage for anything I can remember offhand.

Meds were cheap because the whole country’s Medicare board bargains with the pharmaceutical companies directly, and if your meds are too expensive, they will just go with a competitor and leave that vendor out of the Medicare coverage schedule. This is not unequivocally a good thing, but those meds are still available on the market, but you will pay more for them unless you have third party coverage. Generics are also available just like most places.

Not sure if it’s changed since, as that was like 15 years ago.

Right. Which is still called insurance.

Medicare in Australia: https://www.health.gov.au/health-topics/medicare

> Medicare is Australia’s universal health insurance scheme. It guarantees all Australians (and some overseas visitors) access to a wide range of health and hospital services at low or no cost.

Medicare in Canada: https://www.canada.ca/en/health-canada/services/canada-healt...

> Medicare is a term that refers to Canada's publicly funded health care system. Instead of having a single national plan, we have 13 provincial and territorial health care insurance plans. Under this system, all Canadian residents have reasonable access to medically necessary hospital and physician services without paying out-of-pocket.

Hope you're feeling better now. That kidney kick must have been hell of a painful one.

I actually tried to keep working. I felt horrible pain, but my sympathy for the horse masked a fair bit of it til I got home an hour or so later. The pain was an intense dull ache. If I hadn’t peed blood, I probably would have just suffered through it, because I grew up poor in USA without health insurance of any kind, and was acculturated to not taking medicine or receiving medical treatment unless mandated by law or in actual emergencies. Once I saw blood in the toilet bowl, I was much less reticent to go to the ER immediately, to put it lightly. My folks were first responders in a very remote rural area when I was growing up; I knew that much blood in my urine was potentially life-threatening without immediate medical interventions if blood clots were to form.

I still feel bad for the horse. It got spooked, and was entirely blameless, if a bit anxious. It was a windy day, and the tin roofs of the surrounding buildings set the horse off somehow. I had too much slack in the lead rope, the horse walked ahead just far enough away for me to be in the danger zone right behind. I saw a motion blur of horseflesh, reflexively covered my face, and took a rear hoof right below my ribs. I almost kept my grip on the rope, but some part of my mind decided to let the horse win this one, and I dropped it right as my legs gave out from the impact and the sudden pain. The horse ran, and trampled it’s own rope, broke the bit in its mouth. The poor thing’s tongue was cut top to bottom, and halfway across.

I failed the horse in my careless handling and lack of empathy and situational awareness on that day. As these were racehorses, I’m glad that they received medical care and made a full recovery after missing some races. On balance, maybe the horse got off easy compared to how hard they run them on race days.

That was the worst experience I had with a horse. The second worse was being lifted off the ground by my bicep by a mother horse when I calmly petted her daughter. And the younger horse was nearly as big as her, so not a baby by any means.

Horses are to be respected. All animals ought to be; doubly so for those that can literally trample you to death.

In addition to the other comments, it should be pointed out that not everyone needs car insurance but everyone will require medical attention at some point.

That's not true though? It's entirely possible to be healthy right up until the moment you die and never get into a situation that a doctor or hospital could help with.

It's also possible to win the lottery but we shouldn't legislate around the tiny minority.

Most people drive too. So whatever distinction you're trying to draw between car insurance and medical insurance is bogus both in theory and in practice.

The baby "you" needed health insurance the moment it took it's first breath and let out a shriek of terror due to its suddenly change in circumstances. I know from experience: Until my wife gave birth, all the claims were for here. Once born, hospital bills were partitioned into those for my wife and those for my newborn.

Plenty of people are born at home and don't receive any particular medical treatment. Of course there are risks to that, but it's hardly unheard of.

> It's more surprising that he was so open about the naked corruption/nepotism in the origin story. Apparently there's a sector of society for whom that is also normal and acceptable.

I distinctly remember this from the interview as well! He simply drops it in there that he married into the family, that it’s a family run company, that the family owns some significant portion of it… “family family family”… it was an odd interview.

> but are you also self-insuring against a lawsuit for damage to the other guy's car?

I guess their insurance company is going to come after me/my insurance company to pay up… yeah without insurance I’d simply hope I could reason things out with whoever.

I’ve actually had to do that in the past. After a minor collision I asked the other driver whether we could settle things directly, and how much he’d feel was fair for me to pay to fix damage to his motorcycle. He named a figure and we drove to an ATM and I paid him that, we still exchanged info in case anything else came up but nothing did. Yes it was scary, but I think it was more efficient and less hassle in the end. This occurred in Los Angeles.

While corruption may have been the source of this particular business, the fact that insurance is required by law is a good thing. The counterfactual involves a bunch of uninsured judgement proof drivers clogging the road and ruining everyone else's day/life. The problem is already bad enough now when it is illegal to do.

Hot take: if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees.

Otherwise, it's just an income-generating scheme for private parties.

Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court. They don't have to follow that the police report says regarding whose fault it is.

How do I know? Got told that after getting into an accident on a road trip. So much for a good thing.

Depends on the state. Some have no fault allocation systems to avoid these lawsuits.

> it should be provided by the state and paid for with taxes / annual registration fees

The free market is required to accurately price the risk for each driver.

A 45 year old female driver with no infractions is much less risk than an 18 year old male with a DUI, so the former should pay less in premiums. The current system is doing that.

I do not see how a state-provided solution would come up with "accurate" pricing for individuals. Some market is needed.

I could see how some people (especially in high risk groups) would prefer not to pay according to their risk, but I do not agree that is better for society.

A government entity could perform this, no free market required. See residential flood insurance for a government based risk rating example.

IIUC, that is actually a form of government subsidy, which exists only because there are places that are uninsurable due to flood risk. It is politically unpopular to tell people they have to self-insure because they picked a risky to live. If we decided that were something we were willing to tell people, there'd be no issue with letting the market handle it, same as most insurances.

You mean the same policy that resulted in a whole bunch of people living in flood zones? And which we can't get them to leave because it would be politically unpopular to raise their insurance premiums to reflect their actual risk? That seems more like an example of exactly why we don't want the government -- which inevitably means politicians -- setting insurance rates.

Government provided residential flood insurance is a horrible example of moral hazard and should be eliminated. Taxpayers shouldn't have to subsidize investors who choose to purchase property in flood zones.

>The free market is required to accurately price the risk for each driver.

That same market means some will decide that not having insurance is a better deal. Tying insurance to something like drivers licences increases the cost of not having insurance.

>I do not see how a state-provided solution would come up with "accurate" pricing for individuals.

Can the state not hire actuaries?

>Can the state not hire actuaries?

yes, but a sibling commenter has weighed in how it turns out: https://news.ycombinator.com/item?id=29719762

A counterpoint (not necessarily my view but a view nonetheless) would be that if everyone pays into a single required insurance pool then the risk doesn't need to be accurately determined a priori. Each individual's rates might be the same, but they could be lower overall because there are more paying in. A low risk driver may pay more than they use, but it could be less than the market rate regardless.

The risk still needs to be accurately determined, even if not for each individual. If 100 people in a population will be injured and get a pay out of $100k, you need to know that to set general rates.

What I’ve seen in places that have government insurance is the government is constantly trying to backstop the insurance.

Why? It becomes a political hot potato when rates go up, so there is pressure to keep them down with lower premiums. The insurance body doesn’t care because the government will bail them out.

You can just update rates after the fact if necessary. I don't really see the problem with that. People with a bad history may get higher rates, just not based on risk analysis but based on their actual history.

The only way to convert "has a DUI" into a specific rate increase is through risk analysis of everybody with DUIs.

Why is that the only way? Seems to me you could just raise rates after someone caused actual damage instead.

By how much? Logically, the fair amount to raise rates would be the amount that compensated for their increased risk of doing it again. There you are, doing a risk analysis.

(If you had them directly pay for the damage they caused, that wouldn't be insurance, that would be a middle man for restitution.)

By some amount proportional to the damage caused, of course. The more times you cause damage, and the higher the damages, the higher your rates go over time.

I think my point is pretty clear without me coming up with a precise formula: instead of predicting rates, just adjust them based on history instead. After all, someone likely to cause repeated damage in the future is also likely to have caused it in the past.

The only major difference between the two approaches is that mine doesn't require someone to make predictions - which might be biased - in exchange for mine maybe under-charging someone with no negative history who is about to cause a huge amount of damage and then stop paying into the system (death, etc). But in those (rare?) cases, the fact that everyone is part of the system means that the single rare loss is amortized nicely and without bias.

>The more times you cause damage, and the higher the damages, the higher your rates go over time.

But by how much? If it's enough to fully offset the cost of the damage, that's not insurance, but a payment plan. If it's less than the cost of the damage, then you have to decide what it's going to be.

Again, I'm not going to come up with an exact formula. The point stands without one.

You can calculate using any history you like. Weigh past damages based on time between, or time in the past. Be creative.

>Hot take: if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees.

>Otherwise, it's just an income-generating scheme for private parties.

Food and shelter are essentially "required" for everyone. Should those be provided by the state, to avoid it being "an income-generating scheme for private parties"?

If they said "yes" to that they wouldn't be the first in history with that answer.

And we all know how well that worked out.

You mean, it turned a backwater decaying agrarian empire into a world superpower, twice (Russia and China)?

Side note: when the USSR held a referendum on whether it should be dissolved, most people voted to keep it (77% yes, 23% no) [1]. Things by far were not rosy in the late 80s (when a quarter of the nation votes for dissolution, things aren't great), but they weren't 30s either.

That's, of course assuming you mean the USSR/China and ignore all the other welfare states in Europe, as well as programs like foodstamps in the US.

[1] https://en.wikipedia.org/wiki/1991_Soviet_Union_referendum

>Food and shelter are essentially "required" for everyone. Should those be provided by the state, to avoid it being "an income-generating scheme for private parties"?

The answer is: yes, absolutely, and we essentially do that to some extent with food stamps and homeless shelters; but, of course, not nearly to the extend that we can and should.

Shelter isn't just "required" in scare quotes, though; it's illegal to be homeless (you can get charged with loitering, trespassing, etc. if you try living pretty much anywhere where you're not paying for it some way).

We all know that the rental market is a scam, since mortgage payments (i.e. what you pay to own the property, plus profit for the bank) is lower than the rent in most markets (sometimes even after adding property taxes on top).

We also know how zoning restrictions on construction of residential properties and high-rises artificially restricts the supply of housing precisely where it's needed: i.e. where the jobs are (Example #1: San Francisco Bay Area).

So yes, the housing market here is an incoming-generating scheme for landlords. To the extent that people joke that Silicon Valley is a machine to transfer money from venture capitalists to landlords through engineers' pockets.

Note that I am not saying that the state should be the only supplier of shelter, food, healthcare, transportation, and education. Just that it should be one of the players on the free market, with a cost of 0 (or barely above nominal).

That's how Europe does healthcare and education, and at the very least it shows that we can afford this on a grand scale.

>>Food and shelter are essentially "required" for everyone. Should those be provided by the state, to avoid it being "an income-generating scheme for private parties"?

>The answer is: yes, absolutely, and we essentially do that to some extent with food stamps and homeless shelters; but, of course, not nearly to the extend that we can and should.

The programs you described only satisfy the "provided by the state" part, not the "avoid it being an income-generating scheme for private parties" part. If you're arguing it's something like food stamps, then that calls for the state paying insurance premiums on behalf of drivers that can't afford it, not for some sort of government insurance program.

>Shelter isn't just "required" in scare quotes, though; it's illegal to be homeless (you can get charged with loitering, trespassing, etc. if you try living pretty much anywhere where you're not paying for it some way).

Sounds like it's actually required, both in the sense that in certain areas if you don't have shelter you'll freeze to death, and in the sense that you need somewhere to sleep. The fact that you can get a place to sleep by violating other people's property rights, or commandeering communal resources for your own needs (ie. camping on the sidewalk or public parks) doesn't mean shelter isn't required. You can plausibly feed yourself by stealing from farm fields across america, that doesn't mean food isn't required.

>We all know that the rental market is a scam, since mortgage payments (i.e. what you pay to own the property, plus profit for the bank) is lower than the rent in most markets (sometimes even after adding property taxes on top).

1. source for this? in the hottest markets at least, price to rent ratios are so insane that the only way landlords are making money is through appreciation

2. you forgot to factor in maintenance, and cost of capital

3. the fact that there's a better deal doesn't mean it's a scam. the fact that costco sells 96-roll pack of toilet paper, doesn't mean that the 6-roll pack they sell at regular grocery stores is a "scam". The same applies to rentals. They offer flexibility compared to ownership. factoring in transaction costs, buying houses isn't worth it unless you're planning to stay for years/decades.

4. it's funny you mention mortgages and how banks make profit on them. Are they a scam? surely it must be, because they're selling money to you for more than what they're buying money for (otherwise they wouldn't be making a profit)?

>Note that I am not saying that the state should be the only supplier of shelter, food, healthcare, transportation, and education. Just that it should be one of the players on the free market, with a cost of 0 (or barely above nominal).

>That's how Europe does healthcare and education, and at the very least it shows that we can afford this on a grand scale.

1. yet, even progressive region such as "europe" only does it for healthcare and education, and not shelter, food, and transportation. Why is that?

2. The US already has government provided education. have you heard of public schools and state universities? Seems like the problem with education isn't due to the government not getting involved, it's because government institutions aren't bothering to undercut private ones.

3. "europe" doesn't have a unified policy for healthcare. Yes, there are some countries where there's a healthcare system run by the government (eg. NHS in uk), and there are some that provide government insurance option in addition to private offerings (eg. germany), but there are also countries that have only have private insurance (eg. switzerland).

The problem with that idea is moral hazard. It's better for people to be incented financially to drive safely.

Insurance is one of those areas of knowledge where, unless you're an expert, you can easily be told true statements that are highly misleading. Overlap that with the law, and you get a fantastic tangle of misleading information that can cripple your ability to make good choices.

It's probably true that, technically, liability insurance is only available once the driver loses in court, but that means very different things than it implies. For one, the driver has no knowledge of the court case, in many situations. The insurance companies work with one another to figure out who is paying what, and the insured is largely uninvolved.

You can "be told" many things about a system you're unfamiliar with that sound, on their face, absurd, but upon inspection actually make plenty of sense. This sounds like one of those things.

Another area like this is special education in public schools. Meaning the IDEA etc...

British Columbia forces you to buy liability insurance from the provincial government and it's awful. The premium calculations are illogical and inefficient. Bad drivers are subsidized by good ones, the rates are among the highest in the country and the govt manages to lose money on it.

My experience in other provinces with private insurance companies was much better.

That's likely not because of government inefficiencies, but because a small segment of the population is responsible for the vast majority of costs. Mostly drunk drivers, to be frank - but also that certain lovely category of individual who feels that societal rules don't apply to them.

Private insurers can say "fuck no, we're not insuring you, you've got 2 DUIs, 6 speeding tickets, and numerous equipment violations" or make the cost of that insurance absurdly expensive, pricing them out.

If the government is providing the insurance, they likely have to say "yes" to everyone. Waiving the requirement to insure everyone is well and good until someone looks at the data and sees that your completely non-discriminatory rules are effectively discriminating against certain classes of people.

> The premium calculations are illogical and inefficient. Bad drivers are subsidized by good ones

Good drivers subsidizing bad ones is the entire concept of an insurance pool. The corrective mechanism is that if a driver reveals themselves to be bad enough, you make them stop driving.

No, it's not. The premise of an insurance pool is that the lucky subsidize the unlucky. Differences in premiums are supposed to account for good vs bad.

> Differences in premiums are supposed to account for good vs bad.

This would require a way to measure driving quality with perfect accuracy and no errors. I feel comfortable in my claim that (1) nobody can do this; (2) nobody claims to be able to do this; and (3) nobody believes that this might one day be possible.

Differing premium rates just mean that you have several pools, each defined by their premium rate, in which the better drivers subsidize the worse ones.

> Hot take: if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees.

Which it is in some jurisdictions, e.g., BC, Quebec. In the jurisdictions where it is done by the private sector, it is generally heavily regulated.

> Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court.

This depends on the jurisdiction: in the province of Ontario, with is a "no fault" area, there are few(er) court cases:

> Ontario has a "no-fault" car insurance system, but this does not mean that no one is at fault in an accident. The term "no-fault" insurance simply means if you are injured or your car is damaged in an accident, then you deal with your own insurance company, regardless of who is at fault. You don't have to go after the at-fault driver for compensation.

* https://mitchellandabbott.com/no-fault-insurance.php

> Essentially, no-fault insurance in Ontario is that in the event of an accident (without or without collision coverage), all drivers involved will process individual claims through their own insurance companies to get coverage for damages and injuries. It’s a system that has prioritized the claims process for drivers who need reimbursement so that the drivers aren’t kept waiting.

* https://www.ahainsurance.ca/car-insurance/no-fault-insurance...

* https://en.wikipedia.org/wiki/No-fault_insurance

There's even a specific regulation called "Fault Determination Rules" that covers the most common cases:

* https://www.ontario.ca/laws/regulation/900668

There are pros and cons for both public/government versus private insurance, and 'fault' versus no-fault insurance, regimes.

> if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees.

It's not, even in theory, in most places, though. It's just a convenient option to a liability bond that most drivers choose.

> Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court. They don't have to follow that the police report says regarding whose fault it is.

Well, yeah. It's liability insurance. It has to pay when a legal liability is established against the driver. That is, exactly when the driver would have to pay in the absence of insurance.

Determining legal liability is what we have courts for, not police. The cops doing the courts’ jobs is a phenomenally bad idea.

> Are there insurance products that people are really satisfied with and trust will pay out in case of event X?

I've always been happy with renter's insurance and have paid it since my first apartment in college. I pay $100/yr for a 50k limit policy. Unlike car insurance I am not required to have this, but I've always considered it to be worth it.

I also pay for pet insurance. Again, not required to have it but when I considered cancelling and self-insuring I filed a claim and was immediately paid out hassle free. That convinced me to keep it.

> I also pay for pet insurance. Again, not required to have it but when I considered cancelling and self-insuring I filed a claim and was immediately paid out hassle free. That convinced me to keep it.

Don't get rid of it, the cost of healthcare for pets is quickly reaching the cost of healthcare for humans.

I believe it. I had a high deductible health insurance plan and had a serious injury that required a hospital stay. Even though I paid for all of it before meeting my deductible, it was still cheaper than the medical costs I have spent on one of my three pets who is actually young and very healthy, but accidents happen.

A family member's dog's ACL surgery cost more than the ACL surgery they themselves got a few years before. Pet medicine is filled by pharmacies and costs as much as human medicine does. It's nuts.

What's supposed to be nuts about that? The surgery costs the same no matter whether you want me to do it to a dog or a person. The pills cost the same whether you want to feed them to a dog or a person. That's exactly what you'd expect.

Drug costs are mostly a function of development and marketing (there are exceptions where production dominates). Development cost is dominated by cost of human trials. It is not clear that drugs (particularly for non animals not destined for human consumption) should be as expensive as human drugs. And that is before getting to to unusual gap between US drug prices and international drug prices.

> It is not clear that drugs (particularly for non animals not destined for human consumption) should be as expensive as human drugs.

Are they different drugs?

Sometimes yes, but it's the testing and regulatory approval costs that should in theory be lower for animals.

So what? Those costs happen before you sell the drug. That would make a difference for a drug that isn't approved in humans and therefore didn't pay the approval cost at all. It makes no difference for a drug that is approved in humans.

Thank you for the positive example!

Have you had to get anything paid out from renters insurance?

Pet insurance seems like a great business to be in… is there anything that requires you to actually have pet insurance? Would it cover costs from your pet hurting someone else? Or is it more to cover pet health costs? Really curious to know the ways it’s similar or not to US human health insurance hah

It is for unexpected pet health care costs. Your pet attacking someone would be covered under homeowners or a personal liability umbrella.

I've never made a renter's insurance claim.

Pet insurance is only for emergency and/or life-threatening injuries and conditions, and surgeries and other costs related to them. Think getting hit by a car or getting cancer. It doesn't cover vaccinations, annual visits, and tests done for preventative measures. This is the main difference between pet insurance and US human health insurance since if I understand correctly, most (all?) medical plans offered in the US are required to provide preventative coverage for annual visits, vaccinations, etc.

My pets are young and healthy so 100% of their medical costs are preventative which made me consider cancelling my policy. For reference I pay $65/mo for my policy which covers three pets. In my area an annual exam and vaccination series for the three pets costs $300 so about 2/3rds of my annual pet medical expenses is "wasted" on premiums. But a minor accident that could happen to any pet ended up costing more than a year's worth of premiums and it was nearly 100% covered by insurance without a deductible applying.

I've still paid more in premiums than I've gotten back (which is obvious; how else does the insurance make a profit?). I was considering self-insuring instead by taking the money I was spending on premiums and putting it into a savings account. After doing some research on emergency procedures I realized that in some rare circumstances a single injury could cost a decade of premiums. If this happened multiple times I'd have to make a tough decision to put down the pet simply because I couldn't afford the procedure. These pets didn't ask to be brought into this world and are often abused and neglected before becoming adopted. They deserve a long and healthy life if one is possible. I'd rather "waste" a few hundred dollars a year for the peace of mind that I can afford to treat any illness or injury that occurs.

10x is right. We didn’t have pet insurance. My dog got hit by a car in September. Everything is good now, but the incident broke his leg and popped his eye out of socket. Between emergency surgery for his eye and orthopedic surgery to put a plate in his leg (the other two options were amputation or putting him down) we ended up spending just shy of $9,000 for all the procedures and follow ups. I also feel very similarly about having a responsibility to my pets health. We’re lucky we could afford the procedures, because it would have been very hard to put him down.

Agreed. Renter's insurance is a great consumer purchase in my experience, since it also doubles as insurance for your property outside the home. Not having to worry about your stuff getting stolen (for example, your laptop in a cafe) is great peace of mind.

Rental insurance paid me $3k when I had my backpack stolen in Belgium. This easily paid for 3 decades of insurance and, realistically, I think most people are likely to be the victims of theft at some point over a three decade period.

My theory is that the way they make this work economically is that many people aren't willing to go through the hassle of record-keeping and filing a police report to get payouts. (In practice, this took less than 1 hour of my time total.)

Side story about how satisfied people can be with the mandated insurance.

I was on coast-to-coast road trip when I got into an accident in TX. Someone was trying to pass me on the left in a turning lane, veered into the incoming lane, and then hit my vehicle's front wheels from the back.

The police ticketed the other driver, and told me that insurance will surely take care of that on my side. "Wow, it's worse than we thought", they said, looking at the footage from the security camera. There were eyewitnesses too.

Now, this was a $6K car (used Fiat 500) that I got specifically for the road trip, intending to resell it in the future. I didn't get comprehensive coverage for it, figuring that if I damage it, welp, it's on me; and if someone else does — that's why we have mandated liability insurance, right?

...I got zero ($0.00, zlich, nada) from the other driver's liability insurance. They informed me that their expertise concluded that the accident was my fault, and, by law, they don't have to abide by the police report.

That's to say, the only way to get any money from them is to sue them, in TX. Figuring that the car is registered in California, and the damage was about $3K, they decided to not pay me anything at all.

Because they can.

Now, if I had comprehensive coverage, they'd be facing my insurance company — because one of those has to pay up. But they're facing me, so I'm welcome to sue or get shafted (with a nice side of gaslighting from the insurance agent, who was very convincing about how I should trust their assessment).

The whole thing is a scam.

Whats the scam? The insurance company was hired to provide insurance for the other driver. By all accounts they did so. If the other driver had no insurance, your options would have been the same: hope they pay out of good will, or sue them.

The public policy motivation for liability insurance is to protect the lawsuit route. If you sue an uninsured driver and win, you might not be able to collect (getting blood from a stone). But if they have liability insurance you can collect on a judgement.

You choose to drive with only liabilty insurance, and are upset that insurance didn't cover an accident when you had no liability.

The 'scam' seems to be insofar as wealthy and powerful entities can exploit the functional inability of those less wealthy and powerful to meet them on even terms in the legal system. I think we could all agree that in an ideal world if someone is at fault, their insurance should pay out to those they damaged. The reality is that may only happen if you have an entity of similar magnitude to go to bat for you.

That doesn't mean it's a good idea to not get comprehensive insurance, but police reports should probably carry some weight without requiring a suit.

>I think we could all agree that in an ideal world if someone is at fault

But that's the thing. The other driver was only declared "at fault" by the police report, which might hold some weight, but isn't the final say.

>but police reports should probably carry some weight without requiring a suit.

what would that entail?

> The 'scam' seems to be insofar as wealthy and powerful entities can exploit the functional inability of those less wealthy and powerful to meet them on even terms in the legal system.

Even without insurance or greater wealth, a party from whom you believe a liability should exist who has no interest in paying could have done the same thing here. If you aren't willing to sue over a disputed liability, it might as well not exist.

> but police reports should probably carry some weight without requiring a suit.

Any proposal to do that in effect makes the police investigation a court of first instance, which either means creating additional procedural rights that apply before it can be completed (driving up costs) or a very real denial of due process.

> Any proposal to do that in effect makes the police investigation a court of first instance, which either means creating additional procedural rights that apply before it can be completed (driving up costs) or a very real denial of due process.

Not nessasarily. The 'additional weight' could still be something that requires a suit to take advantage of directly, but which the threat of compels behavior. For example, many localities have rental laws that compel the landlord to pay thrice what they would otherwise owe in certain circumstances. E.G. if my landlord simply refuses to refund my security deposit without proper reason, or without following proper procedures within 45 days, then I can sue for 3x the deposit and attorny fees.

A similar thing can be implemented for vehicular damages. Something along the lines of:

1) If you are found liable and

2) Were given adaquete notice and oppurtunity to pay and

3) Ought to have known you were liable

Then the defendent is entitled to punitive damages for your making them take you to court. You don't even have to go as far as most tenent laws go. You could allow for a loosing defendent to argue that there defense was reasonable, (or reasonable given evidence available to them at the time), and that they should therefore not owe punitive damages.

Of course, this still is only tangentially related to insurance.

What you propose is additional weight that does require going to court, basically additional incentive to settle if it is reasonably perceived the other party will take the case to court.

But there are already additional costs the insurance company would bear if it went to court, which is why they will mostly settle if there is any substantial evidence (like a police report) and even a shadow of a threat of legal action, including—but not limited to—an insurance company on the other side. Neither that nor any additional weight you give the police report that requires going to court alters the calculus at all when the liable party (whether or not they have an insurance company as their agent) is certain you won't take that step.

>3) Ought to have known you were liable

How would that even be defined? Is it just based on the balance of evidence available? We already have something for this. If one party is really obviously guilty, then the other party can call for a summary judgement and skip much of the expensive trial.

Summary judgement applies when the facts not in dispute are sufficient to reach a legal conclusion. If there is a material dispute of facts, no matter how obvious the evidence is, it must go to trial. Further, summary judgement only reduces the cost (for both sides); it does nothing to act as a deterent.

> How would that even be defined?

That depends on how claiment friendly you want to be.

The key piece would be: "based on what the defendant knew when they refused the request for payment". Standard evidenciary rules apply for showing that the defendant knew something. In this case, the key evidence would be a police report and pictures sent to the insurance company, so I don't think there would typically be a dispute here.

The harder part is defining "ought". Courts already have a reasonable person test they apply to other situations. You could also apply the clear and convincing evidence standard to the applicable evidence (or, if you really wanted to, either preponderance or beyond a reasonable doubt).

The real answer is that in this hypothetical the legislature would pass a law, and then the appellate courts will spend decades clarifying the law until the legislature changes it again.

That doesn't seem reasonable. Whoever is liable should pay, there shouldn't be a little game where you can avoid paying because it will cost the other guy too much.

Imagine if murder cases were only prosecuted if the family had funds to investigate, and they only got refunded if the murder were proven.

> Imagine if murder cases were only prosecuted if the family had funds to investigate, and they only got refunded if the murder were proven.

Vehicular crimes obviously don't depend on either a victim or the victim choosing to take legal action for the offense, OTOH, wrongful death, the civil cause of action parallel to murder and other criminal homicide offenses...has exactly the same requirement as any other tort that someone has to file suit.

To the extent there is a criminal or other public offense (traffic infractions may or may not be strictly criminal depending on state law) involved in the accident, that would have been pursued without the victim lifting a finger as a consequence of the police report, just like murder investigations.

> If you aren't willing to sue over a disputed liability, it might as well not exist.

I think this might be at the heart of it.

The article (about how hard actuarial math is) and the insurance buyers make the mistake of thinking that all that matters is downside in case of event X with particular probability P. However, instead you have to think about chances of X AND chances of being able to navigate a system that is outright adversarial to parties that are not the insurance companies.

The “house” always wins…

>The article (about how hard actuarial math is) and the insurance buyers make the mistake of thinking that all that matters is downside in case of event X with particular probability P. However, instead you have to think about chances of X AND chances of being able to navigate a system that is outright adversarial to parties that are not the insurance companies.

Are people going through and calculating the expected utility of purchasing insurance, and that calculation is being thrown off by counterparty risk, leading them to buy insurance they wouldn't have bought? I doubt it.

>The “house” always wins…

is there an expectation otherwise? You buy insurance to protect against risks, not because you think it's a positive expected value investment.

Yes, the expectation was that the risks are those you bought insurance for. Additional protection against being bullied by other insurance companies is not obvious.

No, he’s (reasonably) upset that the other side’s insurance did not pay out when it was clearly their client’s fault, banking on his difficulty of filing a lawsuit.

What do you call someone who victimizes people he know have a disadvantage in suing him?

That doesn't really seem to be an issue with insurance per se. In a world without insurance, you could still have people refusing to pay even if it's "clearly" their fault.

It is a problem with the insurance, as it would be for anyone else. Shitty tactics are not exclusive to insurance, but that doesn't negate their actions, or the expectation that they should perform better.

> What do you call someone who victimizes people he know have a disadvantage in suing him?

A for-profit business.

Sure, unequal, wealth-gated practical access to the courts is a real problem, and it impacts basically every area of American society.

But it doesn't make mandatory auto liability insurance a scam, any more than it makes literally every commercial industry a scam.

The claim I was defending was that the way auto liability insurance is done is a scam, not that the concept of requiring liability insurance is a scam.

Looking back, the original post's comment on that point was a final aside that was ambiguous. But my defense is of the charitable interpretation of that remark. Any auto liability insurance system should be written to avoid that kind of gaming.

>The claim I was defending was that the way auto liability insurance is done is a scam

Seems like it's working as intended? The purpose of auto liability insurance is to... insure the policyholder from liability. If you're not the policyholder, it's not working for you. If you're a policy and you're not experiencing losses stemming from your liability (ie. you crashed your own car), it's not covered. Others in this thread seem to think it's a general purpose mechanism for making all parties involved whole, which is a misunderstanding.

I thought I addressed exactly that in my original reply It’s not really working if and when once side is incentivized not to pay when they can and are obviously at fault.

Your comment is like saying “yeah that corporation used a natural pond as a toxic waste dump, so what? Corporations are supposed to make a profit, right?” Yes, they are … subject to other social desiderata like respecting others’ rights.

You seem to be attached to some bizarre strawman that the OP was expecting his own liability to cover the other party’s faults. That was never the argument.

>It’s not really working if and when once side is incentivized not to pay when they can and are obviously at fault.

This seems to be based on the "making all parties whole" interpretation of insurance, rather than "protect the policyholder". Are you ignoring my prior comment entirely? Are you trying to argue that insurance companies ought to have a "making all parties whole" imperative rather than a "protect the policyholder" imperative? Or perhaps you take issue with insurance companies reneging on their obligations?

It seems like from the rest of your comment that you take issue with the latter, rather than the former. My response to that would be: I agree reneging on obligations in general is bad. However, even you seem to agree that there's some room for dispute, hence why answer was qualified with "obviously at fault". Other commenters have suggested somehow punishing insurance companies in cases where they're "obviously at fault" and refuse to pay up. However, the trouble then becomes, what counts as "obviously at fault"? I have not received a satisfactory answer for that https://news.ycombinator.com/item?id=29720344.

> This seems to be based on the "making all parties whole" interpretation of insurance, rather than "protect the policyholder". Are you ignoring my prior comment entirely?

No, you’re ignoring the three comments I’ve made now that clearly indicated I was talking about “the structuring of the insurance system” (rather than the OP’s liability policy), and continuing to argue against something you should be aware I’m not endorsing.

And yes, making victims whole is the purpose of mandating liability coverage for drivers.

Can I ask what you think your comment is adding to the discussion that it didn’t have before?

> And yes, making victims whole is the purpose of mandating liability coverage for drivers.

Yes, agreed, but you aren't a victim until a court issues a judgement that you are, hence the other parties insurance has no reason nor obligation to make you whole.

A dispute is just a dispute until a court rules on it. Statements made by LEOs and witnesses are only examined when it is presented before a court. If you don't present your argument before a court, you are not automatically in the right.

> thought I addressed exactly that in my original reply It’s not really working if and when once side is incentivized not to pay when they can and are obviously at fault.

That's not auto insurance that's the underlying legal system, and it's not the feature of the underlying legal system that mandatory liability insurance exists to address.

The intent of mandatory liability insurance is to fix a specific problem: a liable party might not have the resources to pay even a moderate damage claim if found liable. That's what mandatory liability insurance exists to address. That is the whole intent.

If you want to fix the “problem” that people aren't incentivized to proactively pay expected liabilities even when there is a clear indication that the party to whom they would be owed is not willing to pursue them in court, well, you are certainly free to propose a solution, though I don’t expect that there is one that doesn't have more adverse effects than benefits. And, in any case, that's not what mandatory auto liability insurance is designed to address.

It seems more like the poster was complaining that actually following through was hard and a pain in the ass, therefore the game is rigged.

Really it’s just they’re used to someone else doing all the hard work and don’t want to shell out or expend effort for when something doesn’t go smoothly.

Having dealt with contractors and others who decided doing what they were supposed too was clearly too hard (and then making them do it or deal with the consequences), it’s just how life is. Some people will make you make them, because most people are too busy or distracted to do it, and they usually get off Scott free.

It sucks, but it is what it is.

I don't know what you think you're adding to the conversation here. The point of the auto insurance system as mandated by governments, including the "required liability" part, is to rise a bit above (or a "smidge above" as you might say) this folksy "it is what it is" nihilism.

If no one pushes the button that is provided to do anything about it, what do they expect to happen?

The original comment seemed to be complaining that no one was pushing the button for them, and the other side wasn’t just doing something without them pushing the button.

Well duh.

> The public policy motivation for liability insurance is to protect the lawsuit route.

A friend of mine had the same experience from the other side. She ran into some guy's car, apologised for her mistake and told him not to worry because she was fully covered. The first sign that something wasn't right was when a summons to appear at the magistrate's court appeared in the letter box.

She asked the insurance company what was going on and they said "just send the paper work to us and don't worry, we'll take care of it".

Then she got a knock on the door from a pair of court-appointed officers who were there to discuss her financial situation and assist her in arranging a payment plan to pay off her fine. Her insurance company had not sent a representative to the trial, so the magistrate found in favour of the only party that had turned up.

After some screaming on the phone, the insurance company paid the full amount of the judgement.

Any judge worth his salt will understand the global implications (courts clogged with litigants, inability of poor people to use cars) if insurance companies stonewall when their client is at fault, whatever the odd lot who comment in HN think. The judge should hit the other party.

Bear in mind that this is a matter of public interest and romwell has not signed an NDA. S/He should name that insurance company!

> The judge should hit the other party.

What judge?

The whole scenario is around a party who was not willing to go to court. There's no judge involved.

The appropriate course is to sue the other driver directly and ignore the insurance company. A person cannot ignore a court summons, not even in Texas.

The judge will know that the other driver's insurance will ultimately pay, so he can punish the insurance company for its intransigence by putting a heavy financial penalty onto the other driver.

> The appropriate course is to sue the other driver directly and ignore the insurance company.

Yes, that's how you formally sue in an accident. It's not the hack you think it is, though, the insurance company defends the lawsuit, that's part of the insurance agreement.

It's also specifically what OP was unwilling to do which resulted in the insurance company not paying, and why any “the judge should...” is missing the point. If there was even the slightest expectation there would be a judge, the insurance company would have likely paid without batting an eye.

> If there was even the slightest expectation there would be a judge,

Okay, I'm confused. My anecdote, which comes from Australia, indicates a 100% expectation of a judge. Are you saying that in Texas, a $US6K matter is likely to be considered too vexatious/trivial to receive a trial?

Or is it actually possible to decline a lawsuit in the USA?

This is an "explain it to me like I'm five years old" moment. I really don't know what you guys are talking about.

>Okay, I'm confused. My anecdote, which comes from Australia, indicates a 100% expectation of a judge. Are you saying that in Texas, a $US6K matter is likely to be considered too vexatious/trivial to receive a trial?

His point is that the OP (ie. https://news.ycombinator.com/item?id=29719047) is refusing to sue, so there's no case to bring before a court. Everything else is irrelevant. Even if you'll obviously win, but you don't sue, it's not the state's job to file lawsuits for you.

Lawyers can’t represent clients in some small claims courts.

And often just filing is enough for them to do the math and just pay out.

Sure, it’s not fair, but that’s why we have courts in the first place.

> Lawyers can’t represent clients in some small claims courts.

Which, given that the OP resides in California and was unwilling to pursue legal action in Texas because of inconvenience, isn't really helpful.

> And often just filing is enough for them to do the math and just pay out.

Yes, even just hinting at willingness to file a claim probably would have gotten the insurance company to settle in this case. That’s been the whole argument from the beginning.

> The appropriate course is to sue the other driver directly and ignore the insurance company. A person cannot ignore a court summons, not even in Texas.

As I read it, the teller of this story was unwilling to go to court, not even small-claims. If the justice system is not brought into the picture you can't seriously expect anyone to take claims of "you owe me money" seriously.

> You choose to drive with only liabilty insurance, and are upset that insurance didn't cover an accident when you had no liability.

Seems clear to me he's upset the other driver's liability insurance isn't covering the accident in a case where law enforcement and others see clear liability for that other driver, and other driver's insurer's reasons seem to more or less amount to "you haven't legally compelled me to pay yet, and probably won't."

> Seems clear to me he's upset the other driver's liability insurance isn't covering the accident in a case where law enforcement and others see clear liability for that other driver,

So? Law enforcement officer's testimony isn't a court judgement. You can't seriously expect anyone to pay you if all you have is some testimony[1] that they owe you money.

Testimony is worthless until it is admitted into evidence in court. Keep that in mind and you expectations will be in line with the harsh realities, and then you won't be confused and disappointed about the outcomes.

[1] Testimony, even from a LEO, isn't a fact. During a matter in court, testimony that concludes that one party is at fault may be disputed by testimony that concludes that the other party (or no one at all) was at fault. In auto accidents it is not unusual for a court to decide that the liability is shared between the parties (50/50, 70/30, etc) - "Sure, the other guy swerved into you, and he really should have checked his blind-spot before performing the lane-change, but should you have really been overtaking in the slow lane? He should have checked his blind-spot, but you should have not accelerated into his blind spot in the first place."

It sounds like you were just cheap, didn't want to purchase comprehensive coverage, then that came back to bite you. This sucks, but is hardly a scam. Even worse, it sounds like you even understood what comprehensive coverage does (cover 1st party physical damage regardless of situation), and consciously chose not to buy it, assuming that anything that would possibly happen to the vehicle would be someone else's fault. Terrible assumption on a cross country road trip. You would have been equally fucked if you hit a deer, spun out in a rain storm and hit a median, popped a tire and ran into a ditch, etc.

If the other party is 100% at fault, why should they not pay for the damage they caused?

And its not “cheap” to not get comprehensive insurance. Its a calculated risk.

> If the other party is 100% at fault, why should they not pay for the damage they caused?

Because the "other party is 100% at fault" is actually determined by courts, rather than the cops, hence the need for lawsuit.

It does suck that in OP's case they caught the wrong end of this. But again, that's why you carry your own insurance with your own coverage. You're not just paying for the literal indemnification of auto damages, you're paying for the cost of litigating and proving facts in court in various hypothetical scenarios. As the other poster said, cops don't determine fault. You have to go court for that.

As somewhat of an aside, since I think a lot of people don't realize this: Most of the time attempting to allocate blame in auto accidents is a massive waste of resources and time. Insurance companies usually just settle with each other before even getting to court unless the claim involves big $. Even if you were 0% at fault, your insurance company is still incurring some cost to process the claim. Their assessment of your risk is still going up (as it should). They're still going to up your premium. The whole fault concept is just not helpful to the actual functioning of the industry, most of the time. In some states they just got rid of fault altogether, for exactly this reason.

> And its not “cheap” to not get comprehensive insurance. Its a calculated risk.

Yeah, a risk that in this case, did not pay off. So why is this guy whining all over this thread that he got "scammed" when he knew it was a risk?

Am I missing something here?

Shouldn‘t the other driver pay you personally?

And then he‘d have to hash out whether his insurance pays him that money?

> Am I missing something here?

> Shouldn‘t the other driver pay you personally?

That still means the burden is on OP to sue the other driver since their insurance company was not paid to represent them in this type of case.

What everyone is missing: you file a claim with your insurance company, and then they chase down the other party.

If rando-joe you go to the other insurance company...yeah, of course they'll tell you "we investigated our client and found we don't have to pay you" because they're very much hoping you'll say "well shoot then" and go away.

The other option is to have an attorney do it. With multiple witnesses and video footage, it's a slam-dunk case unless the driver's identity can't be established. That means a)an attorney is happy to take it on and b)the other insurance company will likely cave well before anyone even starts talking about court cases.

Oh yeah I apparently missed the suing / negotiation effort.

> ...I got zero ($0.00, zlich, nada) from the other driver's liability insurance.

Well, yeah, you didn't legally establish any liability, or even, apparently, make even the suggestion of the intent to do so.

Insurance companies, being for-profit entities, aren't in the business of giving out gifts.

> Now, if I had comprehensive coverage, they'd be facing my insurance company

Yes, dealing with other driver's insurance companies (along with uninsured drivers) is among the more significant reasons to carry more than liability coverage.

> The whole thing is a scam.

I don't see a scam anywhere.

>I don't see a scam anywhere.

They are telling the government they will pay out if the insured party is at fault for an accident, but in some (many?) cases they don't actually pay out. That sounds like a scam to me.

> They are telling the government they will pay out if the insured party is at fault for an accident

No, they aren't.

They are telling the government and their customer they will pay out if the insured party is found to be legally liable for injury or property damage while driving. (That is, in exactly the situations where the customer would legally be obligated to pay.)

They are also telling their customer that they will defend them from such claims to the extent reasonable, settling where it makes sense to contain liability. That is actually a big part of why one would pay for insurance rather than posting a liability bond (as most states allow) unless you have the funds to keep a general attorney on retainer and seek task-specific representation as needed.

Had they paid out when there was no expectation you would establish liability, that would be a scam against their paying customer.

In this case, who is legally liable?

No one. It's up to a court to decide. If you haven't been declared liable/guilty by a court, you're not liable/guilty. It's simple as that.

> They are telling the government they will pay out if the insured party is at fault for an accident

A police report doesn’t establish proof of fault. Neither does a video. Neither does eye witnesses. All of those are evidence of fault, but not legal proof of fault.

The police report, however, did. Throwing ones hands up to say "well, of -course- the company is going to avoid paying anything out unless taken to a court of law" is to abdicate corporations of all responsibility other than profit making. Just because a person can't afford justice doesn't mean we should accept injustice.

> The police report, however, did.

Police reports are evidence that can support a finding of liability, but they are not a legal establishment of liability. There are very good reasons (the due process clause of the 14th Amendment comes to mind) why that should be the case, it's not a scam..

> Throwing ones hands up to say "well, of -course- the company is going to avoid paying anything out unless taken to a court of law" is to abdicate corporations of all responsibility other than profit making.

Untrue. The corporation here has other responsibilities, but they are all to their paying customer.

So you don’t think corporations have any responsibility to act ethically?

> responsibility to act ethically

They have the opposite responsibility, if anything... They have a fiduciary duty to their shareholders, and considering that the behavior being suggested here would see them quickly run out of business by their less-moral competition, it would probably be a breach of that duty.

The solution is to change laws about redress. For example, statutory punitive damages and attorneys' fees in lawsuits against insurers where the final judgement is significantly different from the insurer's initial offer.

Talk about what is ethical is idle because that simply does not drive corporate behavior.

> They have a fiduciary duty to their shareholders...

Citation please.

Does this work?

https://www.nolo.com/legal-encyclopedia/fiduciary-responsibi....

No, that paragraph describes the duty of officers of the company to put the interests of the company before their own. It doesn’t claim that these officers need to behave unethically. You could even argue that displaying unethical behavior is not in the best interests of the company in the long run but this is of course hard to prove in any direction.

You asked for a citation of fiduciary duty. I already explained why that precludes moral action in this case

I now realize I misinterpretted your prior reply as copypasta of the "maximize shareholder value" trope.

My apologies.

>The solution is to change laws about redress. For example, statutory punitive damages and attorneys' fees in lawsuits against insurers where the final judgement is significantly different from the insurer's initial offer.

1. I you're supposed to have negotiated with the counterparty in good faith prior to a lawsuit. If not, that will be looked negatively by the judge. https://www.sbwllp.com/rule-68-offers-of-judgment/

2. This probably doesn't play well with probabilities/statistics. Suppose we accept your proposal, and say any final judgement that's 5x larger than the offered settlement should be hit with extra damages. Now a lawsuit comes along that the insurance company thinks there's a 12.5% chance of winning, and if they win, the damages awarded will realistically be $1M. Based on expected value calculated from the previous facts, and factoring in court/attorney's fees, the insurance company offers the plaintiffs $150k to settle. That seems like a good offer for all parties involved. However, if the plaintiff gets greedy, and on the off chance he wins, the insurance company will have to pay extra damages, because from an initial offer to final judgement perspective the disparity is huge.

Part 1 is just a matter of public policy. This is all armchair theory anyway.

Regarding Part 2, I actually don't see the problem. If the result is causing insurance companies to be more cautious about lowball offers when there's a range of reasonable outcomes, is that bad? The plaintiff still must succeed at proving damages, so it's not like that outcome is unforseeable.

It does increase "settlement risk" for insurers, but _they're insurers_. Of every kind of entity out there they should be the most comfortable with risk. The greater risk of unfavorable settlements would obviously increase insurance premiums, but if premiums increase because insurers are actually paying more in fair settlements and/or punitive judgements because they failed to pay a fair settlement, again I cannot see the problem.

>but if premiums increase because insurers are actually paying more in fair settlements and/or punitive judgements because they failed to pay a fair settlement, again I cannot see the problem.

But the problem is that in the example I given, the lowball option is fair given the probabilities/expected value.

Corporations are no more ethical than wild animals. "Responsibility" doesn't enter into it, the fact is they don't understand human morality and can't be made to, so you have to handle them with that in mind.

Good luck proving it was unethical as compared to a ‘misunderstanding’. A lot of people are pretty good at CYA.

Being on the shitty end of the stick, of course the poster sees what is happening. But until a judge or impartial third party with some pull sees it, it might as well not exist. And that’s hard.

The idiot of your whole thread is that while you're talking about how "insurance is a scam". Well, you might not like taking the complicated process needed to get stuff from an insurance company, sure. But if you were instead just dealing with an individual, it's obvious your situation would be not better but completely impossible.

Is there a ‘small claims’ court process in the US?

Here in New Zealand there is a court process that is cheap and fairly efficient for low value claims. This sort of thing would probably sneak into that category.

Yes, there is, though the specifics vary (possibly significantly) by state

Yes there is small claims courts in the US but I think cross state lawsuits may not work in all situations. So if you are from California and are suing for an incident that happened in Texas, you would have to go the small claims court in Texas which involved time and money to travel there.

The benefits of Covid! Many switched to Zoom at least for the time being.

And the idea is you sue and when they get served they just settle as it’s cheaper.

You can ask your insurance company to sue them, but you could also sue them in small claims court since your loss is under $15k. They generally can't send a lawyer to small claims court.

I think you mean collision coverage. Comprehensive covers non-collision accidents like theft or a tree falling on your car and is generally cheaper than full coverage which includes collision.

It seems like you may have been screwed over, but also don’t completely understand how auto insurance works in most places which might be partly intentional for the industry.

In most places damages to your vehicle are covered by your own insurance. You can sue the other driver and their insurance will cover them if necessary, but generally you’re only able to be reimbursed up to a certain amount which is why you need to have insurance yourself. Yea, it’s backwards and effectively forces you to have more insurance than you might otherwise want or need.

> You can sue the other driver and their insurance will cover them if necessary, but generally you’re only able to be reimbursed up to a certain amount

Well, you are generally (AFAIK, this is true of all US jurisdictions) legally entitled to your full actual damages if the other driver is completely responsible, but they are only required to carry a certain amount of liability insurance (or, alternatively in many cases, bond); beyond that, you are stuck collecting from them individually after securing a judgement, which may be impractical if they simply don't have the assets.

This is incorrect in some states. Some have limits for medical liability and some have limits for property damage liability.

Michigan for example. https://www.michigan.gov/documents/autoinsurance/ip206a_6799...

Beyond that, you should insure yourself sufficiently because you can’t depend on others to have adequate coverage. Doesn’t matter that you can sue if they have no money.

> Now, if I had comprehensive coverage, they'd be facing my insurance company — because one of those has to pay up.

You don't need collision coverage to cover collisions that are the fault of other drivers -- just uninsured motorist coverage.

It sucks that you couldn’t recoup any compensation, but I’m not surprised at all. You don’t have a relationship with the other person’s insurance. You have a relationship with your insurance. Your insurance covers you, and your insurance may try to collect from the other driver’s insurance company.

Also, this is why auto insurance offers uninsured & underinsured riders (add ons). There’s no guarantee that some jackass who hits your car will have enough insurance or any insurance at all.

Source: was an insurance agent

It's easy to get a lawyer on contingency for this. Don't talk to the insurance company beyond: "I'll settle for $20k now", "Can't do that." Hang up and start calling lawyers (price just went up). They are going to want to hang injuries over them...so start getting massages and feedback from a chiropractor.

You have to play the game to get compensated unfortunately. The lawyers and chiropractor know how to do the dance. Most people just get discouraged by the offending insurance compay and take it in the ass. You should be paid for your time talking to lawyers and going to get massages and dealing with all the logistics of repair, inconvenience of the accident etc.

"They can" because you let them... most people don't value their time and do the the same. Great business, insurance.

Another way of looking at it is that you could recover all of the money you have ever paid out for auto insurance in one settlement--zeroing out your contribution to the scam.

Grind them into dust for every last penny you can pry out of their hands because they do the same to you and all of us. Forget the propaganda about "raising everyone else's rates." That's a joke. This is an industry that punishes loyal customers by raising rates every year until you notice. Then they hope you leave. They are very sensitive about people shopping around each year and always talk about discounts for people who were at their last insurance company for x consecutive years. Scam indeed.

Title insurance is only required, to protect the lender, when you purchase a house using a mortgage. If you choose to buy with cash, you have no obligation to purchase title insurance, but imo you’d be wise to do so.

Similarly, you are only required to have auto insurance for the damage you may cause to others. The only time you are required to insure the value of your car is when you have a loan since the lender is putting up the money/risk.

There are many great examples of when to purchase insurance and many terrible examples (phone insurance comes to mind). I would argue that much of the problem stems from people not being educated on exactly what coverage levels they’re buying.

Disclosure: used to be an actuary at an insurance company. I think the general rule is that your insurance will reliably cover the things that it explicitly says it covers, but that category may be narrower than you think, so you should read the policy and figure out what your policy does and does not cover.

For example, if you go to a doctor who's not in your health insurer's network, you're probably not covered. In some states, you can buy a "full coverage" (liability + comprehensive + collision) policy with a liability limit of $10k, so if you hit someone with your car and they have more than $10k in medical bills they can sue you for the balance. Your provider network and liability limit will both be spelled out explicitly in your policy documents, and neither concept is really that complicated, but if you don't know about them you could be in for a nasty surprise.

Of course, all of that creates a giant pain in the ass for consumers, and that begs the question, why doesn't anyone just make an insurance policy that covers everything the policyholder thinks is covered? And the answer is that nobody would buy it! It would be more expensive (usually much more expensive) than its competitors, and people are generally very price-sensitive in their insurance purchases, and no one would read the fine print to see what they're actually getting for their money.

P.S. The rabbit hole of stupid insurance regulation runs deep. Texas county mutuals are a fun example. Captive reinsurers are another.

I'd love to know more about Texas County Mutuals! I find this stuff fascinating!

It's a legacy category of company that gets favorable regulatory treatment (mostly in the form of more flexible pricing) for auto insurance policies written in the state of Texas. It's been illegal to form a new Texas county mutual since 1955, but the ~20 that have remained in existence since that time are still grandfathered in. Some of them have been acquired by big national insurers (e.g., GEICO fully owns one and has a controlling interest in at least one other), which issue policies on the county mutuals' paper and then cede (transfer) the business back to the parent company. Other county mutuals effectively license their favorable regulatory treatment to other, unaffiliated insurance companies. A significant minority of the auto insurance policies issued in Texas today are still issued on county mutuals' paper.

You made me start to shop around for auto insurance and realize I'm overpaying.

I'm satisfied. I've never had any trouble getting either auto or health insurance to pay out, and I've been a customer for 35 years.

As for title insurance, there's no way I'd buy a house for cash without title insurance to make sure I'll actually own it, and I don't blame the banks for insisting on the same.

Do you want someone who is "self insuring" to crash into you?

No, but it’s an interesting scenario to think through because I don’t think the insurance status of the other party seems to figure into my planning.

Our cars are fully paid for, and I’m operating under the assumption that it’s possible and for them to lose their whole value and I’d have to get a new car.

Covering remaining damage to myself seems to turn into a health insurance event (I.e. how to cover medical costs) akin to suffering from cancer or another high cost illness.

For both of those it’s expected that I’ll have to tap the piggy bank…

Beyond that, the most dangerous scenario to guard against (if I don’t die) would be something that impairs my ability to continue to be employed, so I do pay for AD&E insurance… I’d hope they would come through, but I’m sure they find their ways to avoid payouts.

Perhaps this matters if I felt like they’d harmed me enough to warrant trying to take them to court. In those cases though, it seems like I’d be handling higher order issues like actually trying to stay alive or recovering enough to get back to work.

>Covering remaining damage to myself seems to turn into a health insurance event (I.e. how to cover medical costs) akin to suffering from cancer or another high cost illness.

>For both of those it’s expected that I’ll have to tap the piggy bank…

But is that just? Why should you have to pay the costs (both medical costs and costs from suffering/loss of income) because of a wrong that someone else inflicted? Even if you bought good insurance and are relatively well protected against such events, what about people who aren't well insured?

The joke there is that every driver in the US still needs to carry uninsured driver insurance because so many don't have any and there are no checks. And of course the coverage minimums are utterly laughable; put a kid in a wheelchair and you are looking at many many millions of damage, $100k isn't gonna cut it.

I watched a four-tone college Corolla rear-end a metallic fleck baby blue Bentley being driven from N to S Austin. Since I was stuck there (caught in the pileup, but undamaged), I chatted with the valet. He said that the Bentley would be totaled -- no purchaser would take it, obviously. He said the dealer insurance would handle the whole thing; there was simply no point in even calling the kid's insurance: the car was probably easily 5-10 times the kid's liability limit.

That seems silly given that the cost of the phone call is surely orders of magnitude less than the insurance payout. What kind of business is going to forgo a four or five figure check like that?

>Title insurance when buying a house also seemed like a total “legally required” joke.

Real estate agent checking in here... I agree with you, but there's always a but... the problem is that there really are situations where there's a cloud on title or where title is questionable. This doesn't mean there's anything nefarious going on, and it also often isn't a question of history (IE: title recorded on parchment or something). It also seems to me that some states are just better at maintaining good title records over others - and again, I'm not convinced this is directly related to the timespan of recorded history.

So the problem then is an 80/20 or a 99/1 thing... 90+ % of properties the title insurance is going to be a waste of money. But in those few cases, it really could make a difference. Since the amount of money involved is usually quite small, especially relative to the size of the transaction, it becomes really hard to change the system.

Not to sound snarky, but this was my reaction as well. It's also the very nature of insurance: you get insurance to cover the rare but costly problems that arise. If they're not rare, you don't need insurance because you address the problems another way.

Yeah, that's exactly it. I know I've certainly spent spare brain cycles considering it, and there seem to be a number of startups trying to create cheaper title insurance, but it's not clear to me how to really solve the issue. Basically it's a human behavior and record keeping problem. You have to have perfect records, and you hope some estranged cousin doesn't magically popup with a deed someday claiming to own your house. So, you fork over $1000 just in case.

I'm actually in a transaction right now where the title history is weird and questionable. Will the insurance be a factor? Probably not, ironically, but it's exactly the kind of scenario for which this kind of thing exists.

When we bought our house, after our down payment and on our way to closing I asked a question to the escrow/title insurance person:

* the disclosures show two slightly different figures for the dimensions of the lot, which one is it? (County mapped shows Width W and another owner provided map showed W-1ft or something like that)

Instead of doing anything to try to figure it out, this title insurance company (also doing escrow) lowered the tier of title insurance they were willing to provide LOL

Because this was a material change, once they saw we wouldn’t go through with the transaction without the best coverage they changed their minds about and said that they’d title insure at the highest level… but only once we pushed them on it…

Nobody did any more work to settle the question than us, who went to the house and measured to determine which dimension was right…

Yes, there's plenty that could be discussed about how to improve the title / escrow process, in addition to the information collection process... for much of it, it comes down to being a better process than the alternatives, having been refined over decades (or longer).

The state of that industry is absolutely incredible to me. Throughout the whole home purchase process all I can see is people trying to cover their ass and do the absolute minimum amount of work possible. I understand that they want to avoid getting sued, but the whole process (sell side agency, brokerage, buy side agency, title, home insurance, financing, escrow, whatever) is just agonizing every step of the way. I see a great opportunity for a vertically integrated agency that could own as much of the process as possible and lower the fees, but only admit "easy" clients who don't have any custom needs.

It's actually a much "safer" process for buyers and sellers today...there actually used to be greater integration in the past, but a lot of that went away in order to protect consumers. Regarding fees - when you actually break down the cost of a home sale, the fees really aren't much. On the sell side in particular, that commission should be irrelevant if the listing agent was doing their job, IE: marketing your property in a way to get you a top dollar return. Likewise, from the perspective of the buyer - the NAR / DOJ lawsuit could result in a scenario where the buyer pays an agent commission directly, rather than via the closing settlement, but I guarantee we do not want to be living in that world - it's a case where the current system might seem bad, but it's better than the alternatives. Would love to chat sometime if you have thoughts on the industry.

As much as I love my clients... there are very few who are "easy" in the same way that there are very few "normal" transactions - this is where Zillow et. al. just don't understand the realities of real estate.

> a lot of that went away in order to protect consumers

As I and the parent poster were discussing, the consumers are not being protected. Every single player is just compartmentalizing the areas in which they cover their ass. As a customer I am not being protected - I'm on the hook if anything goes wrong, and nobody actually goes out of their way to check if anything is wrong, as long as the documents look generally like what they are used to.

I will respectfully disagree with you about the fees. I understand the value prop of everyone in the value chain; in HCOL markets their prices are not justifiable and are ripe for disruption (and to be fair in LCOL markets there's no problem with the pricing). This is where vertical integration has a lot of potential.

I expected Zillow to come up. Zillow made a pretty fundamental mistake of introducing a house flipping business on top of their services business; even if they had perfect models that made their flipping business a success, I don't think the two could coexist for long because holding property is so fundamentally different from services. As far as their original business, I think they and Redfin and others "understand the realities of real estate" perfectly well; they are just up against a cartel that would be illegal in most other industries.

Happy to chat - my email can be reached from my profile

> On the sell side in particular, that commission should be irrelevant if the listing agent was doing their job, IE: marketing your property in a way to get you a top dollar return.

A vendor agent’s financial incentive is to sell as quickly as possible, and spend as little time as possible on the sale. Successful vendor agents are very good at convincing vendors that they should sell, quickly. They have a variety of strategies, and vendors are easily convinced they got good value, since successful agents are good at marketing a narrative (and the vendor wants to believe they got a good deal).

Let’s say a successful agent sells 50 houses as quickly as possible. Another more honest agent works to get the best price, which takes them twice the time, so the honest agent only sell 25 houses. The commissions from selling 25 houses nets the honest agent approximately half the profit compared to the successful agent selling 50 houses at lower prices.

Financial incentives really do influence most agents, even if they are not so aware of how they have been influenced by other agents to sell quickly.

Most other countries solved the issue a century ago with Torrens title.

Both Torrens and Abstract are in play in the US, sometimes even within the same state.

Title Insurance is anachronistic. In the internet age, there should be open APIs for someone to check the liens and names on titles.

I guess this is 2021 so...something something... blockchain...?

Title insurance covers things like property line disputes, mistakes made by titling companies, etc.

It’s far more than “who actual owns this parcel of land”.

Insurance is meant to pay out for catastrophic events. It has expanded into silly products like dental insurance which often has caps like “maximum $5,000 lifetime claim for orthodontic”. What it is a basically a savings plan - you and your employer contribute X and the insurer pays out 0.9X in predictable costs.

Insurance is fantastic for personal liability, title insurance, health insurance when you consider the low probability of event ruining you financially.

In terms of helping with regularly occurring costs? No they are terrible.

Mutual companies like State Farm where policy holders receive dividends in the form of discounts make this less of an issue.

And this is not just old laws, states are starting to implement mandatory long term care insurance. Another scam, where it doesn't matter what kind of retirement setup I have

You aren't required to get car insurance for your benefit, you are required to get insurance to pay off the people you hit. Look at areas with low insurance rates (like Philadelphia) and tell me that's the situation you want.

Meanwhile, title insurance isn't legally required. It's required by your mortgage company to protect their money.

> Are there insurance products that people are really satisfied with and trust will pay out in case of event X? I feel like I’m self insuring when it comes to car and healthcare at least.

If you mess up in your car, and kill someone or turn them into a quadriplegic so they need a 24/7 nurse, do you have the several million that it would take to 'pay off' the victims for the suffering you caused?

The most important part of auto insurance is not the cost of fixing/replacing any cars involved in a crash, but the liability component.

From experience from a few close friends: Actuarial science is always in the lists of top jobs but it's a terrible career. It's quite limiting and doesn't pay particularly well. The companies are all old and stagnant and the amount of time put in to studying for exams is taxing. It'd be much better ROI to put that time into studying for sw-eng roles. That is, unless you're particularly interested in memorizing math formulas for insurance calculations

> unless you're particularly interested in memorizing math formulas for insurance calculations

Note that the formulas in question are the opposite of interesting formulas. They're just made-up regulatory rules about how much capital an insurance company has to hold in order to sell insurance. Everyone agrees that some amount of capital needs to be held. Everyone, except maybe some of the "actuarial scientists" themselves, understands that this isn't a scientific endeavor like discovering the laws of General Relativity, it is an arbitrary and convoluted "rule of thumb" type of formula, but it's better than nothing because you really do need to force insurance companies to hold some minimum capital and you need some kind of standard formula to calculate that capital in order for there to be a level playing field between insurance companies.

I think actuarial science undergrad students choose that career because it is one of the safest choices for someone who is good at math but has no interest in science or technology. They are allured by the promise of steady employment and a $100,000 salary, and vague visions of being a high paid "math AND business expert" for a big insurance company where they will get to make decisions involving large sums of money with scientific precision using advanced mathematical concepts.

By the time your young actuary has started working, they are already too deep in to be able to change careers. They made the "safe" choice, now they have to live with it. At first everything seems new and exciting. But 10 years into it, they have settled down roots and family somewhere in the middle of Iowa (because that's where the insurance company is located), knee deep into spreadsheets calculating "Solvency II" formulas for "quarter end." They don't get to make any business decisions, they barely understand how their employers' business even really works, and their career has plateaued at a mediocre level despite having spent 10 years writing all of the available actuarial exams. Unfortunately, that is the only employer of actuaries in town, so they are completely marooned. They spend their free time learning the latest tips and tricks about Excel VBA programming, watching the movie "About Schmidt" repeatedly, and mistakenly envying their peers who work in banking instead of insurance

Since the job is all about helping insurance companies manage risk, someone who makes "safe" choices would be a good fit.

Are you okay there? It got a little specific at the end.

Don't worry, I'm not an actuary.

A small note, but actuaries do a lot more than capital reserving, and even then the regulatory aspect (while important) is not the only consideration.

I am not an actuary, but I have done a lot of actuarial work in a small insurance company, and the work included

- pricing (are we under of over charging for this product?)

- reinsurance (analysis so we can get a good price, as well as making sure what we sell remains within our reinsurance coverage)

- portfolio monitoring (performance/profitability/etc)

- risk aggregation (do we have too much exposure to a single risk or type of risk)

- loss forecasting (primarily for reserving, but also for a 'true' indication of performance, as claims experience is necessarily very laggy)

- product development (for example, what does a travel insurance product look like in a COVID world? What can we reasonably offer and how do we assess the pricing/reinsurance/risk appetite)

Moreover, none of these tasks required nor employed any memorised formulas. You either use a model someone else built, or build one yourself, and then analyse and test as much data as you can so that you can provide good advice. Importantly you have to be able to show exactly how you produced that advice, and be ready to justify every single choice you made while doing so. A large part of the actuarial training seems to be ways of working and thinking that enable this (at least this is my impression from the actuaries I work with).

There are actuaries who just calculate '"Solvency II" formulas for "quarter end"', but there are also actuaries developing advanced risk models for catastrophic weather events using large data sets and machine learning, or shutting down products because the market has shifted and it's no longer viable. In every insurance company I've worked at, actuaries are some of the most influential and respected people there, and do very interesting work (along with some really mind-numbing work!).

This is a fantastic summary of everything actuarial science can touch on. I started my career as a junior actuary at a small insurance startup and was fortunate to be able to meaningfully contribute to many of these areas because we didn't have many senior actuaries on staff. It was a lot of fun as a 23-24 year old to be involved in making such important strategic decision making, it made me realize that insurance companies are really fascinating financial objects.

There are definitely downsides as many are mentioning. As you specialize your job does get more narrow and "boring" (unless you climb the management ladder). Many major insurance companies are not headquartered in interesting or fun places to live. At some point I realized that life was not for me, and transitioned my skillset to data science/machine learning to give myself a more varied career.

But there are absolutely interesting problems to be solved in the insurance space, particularly for people with strong communication/business skills in addition to the wherewithal needed to deal with the actual nuts and bolts of the math and analysis.

"...that is the only employer of actuaries in town, so they are completely marooned..."

In any career there were always those who will limit themselves to the options "in town" and those who will go anywhere, anyhow to move ahead or find a better quality of life. Not saying that one is right and the other wrong, and this may now finally change with the remote work wave, but, there it is.

Some things that actuaries also do besides "memorizing formulas":

* Asset-Liability management, i.e. hedging of future claims on the financial markets [https://en.wikipedia.org/wiki/Asset_and_liability_management]

* Consulting multinationals and nations, how to structure their $bn pension schemes for future generations

* Valuation of embedded options and guarantees by stochastic modelling of the company [https://www.investopedia.com/terms/e/embeddedvalue.asp]

You can get a more balanced impression of topics, e.g. from the UK actuary society [https://www.actuaries.org.uk/studying/curriculum]

They also have past exams in full length incl. solutions.

> put that time into studying for sw-eng

why not both? an environment of stagnant companies offering jobs involving difficult calculations sounds ripe for disruption- is it being strangled by regulation or something?

> why not both? an environment of stagnant companies offering jobs involving difficult calculations sounds ripe for disruption- is it being strangled by regulation or something?

Those jobs only exist because of regulation. The regulation dictates that the insurance companies must do those calculations and that the calculations must be done by a specially ordained priesthood of actuaries who have passed a bunch of random math and finance exams. That priesthood does not want technological disruption, they like their spreadsheets just fine, thank you. In recent years the executives at the insurance companies went through a fad where they decided they wanted to try out this whole "disruption" and "innovation" thing, so they created various kinds of "innovation" departments. Typically, when a company does that, after a few years "innovation" becomes a four letter word and they never talk about it again. In order to climb the corporate ladder as an actuary, you have to focus on the politics surrounding you and not on the terrible technology surrounding you.

I’m not an actuary, but worked earlier in my career for a “chief innovation officer”. Being young and dumb I feel for it, and in truth we had an awesome team that did some really cool stuff with lasting value.

But once we had a few wins, the chief innovator guy got promoted away, and he was the guy with political power. The various fiefdoms goobled up the innovation budget like thanksgiving turkey. The IT idiots “innovated” by buying high capacity toner. The data center people bought new air conditioners.

I left the actuarial field for basically the reasons you describe, but the characterization still strikes me as somewhat unfair. Actuaries reliably make significantly above the median US income right out of undergrad, and reliably double that income within a decade, working 40 hours a week, without needing to go to a target school or get an advanced degree. That alone makes it a good career by most objective standards.

Software engineering is sort of a trump card in that it looks better than basically any other career on paper, but everyone can't be a software engineer. And while the actuarial field draws from a similar talent pool as software engineering, I think most people who enjoy one wouldn't enjoy the other - the former is much more of a business-y profession. I personally find the work I do as a SWE way less interesting than the work I did as an actuary, even though I'm not big on memorizing formulas.

This could be outdated information that I have, but don't actuaries constantly need to study for their exams/certs? Does that fall outside of the 40 hour/week range, or is that done on work time?

You could argue that a lot of SWEs also have to constantly study leetcode on their own, outside of working hours. Especially if you are targeting many of the high paying companies that would pay substantially more than an actuary.

Even if you are fortunate not to have to do leetcode (i.e. frontend engineer interviews seem to diverge from leetcode problems nowadays), you still have to extracurricularly grind on coding in ways that you would typically not encounter during your normal work.

The exam process probably takes something like 2000-3000 hours total, with roughly half done on company time. Exam season is really stressful and can go significantly above 40 hours/week between work and study time, but it doesn't add up to a ton of time when you amortize it over a whole career.

There's also a career-long continuing education requirement that typically boils down to 15 hours/year of seminars or webcasts, all done on company time.

I wonder how the difference looks like if you think over the whole career.

For better or worse, HN posters think the good times will be rolling forever.

I suspect that SWE is becoming a bi-modal field. We often talk about SWE salaries pushing mid-> high six figures, but this is only true for experienced professionals working in very successful companies benefiting from large stock appreciations.

If the stock market was falling/flat for a few years SWE comp would not be as high. By definition, most SWEs will not work at Netflix. The current situation of stable, well paying, and public tech companies is unlikely to persist indefinitely.

I suspect the average US "Senior SWE" is lucky to retire after decades of work having broken $200,000 compensation.

For every 20-30-40something FAANG engineer making $300-500k+, there are legions upon legions of SWEs working at IT-as-a-cost-center non-tech companies making a fraction of that amount.

Yeah, that's a factor too. The actuaries had way better salary trajectories than the programmers we worked with when I was at an insurance company in the Midwest.

A survey I saw said actuaries have high job satisfaction. I had actuary and math colleagues in the risk dept (i was in diff group) and they loved running risk sims, programming, data visualization. In addition to high salary per hour, low stress, no bro-grammer environment or ageism, or shiny new web framework.

In all honesty the actuarial pay is really quite good. Keep in mind your average FCAS makes about 200k a year at only the 10 year mark which is probably 60 to 70k more than your average SWE. That FCAS will go on to have an average salary of 300 to 500k+ later in their career as well. And these jobs are often obtainable outside super expensive areas where SWEs tend to reside (SF, Seattle, NY, etc), which makes the salary much more attractive.

I didn’t go down that path, I went down the SWE path, but I have 2 close friends who I graduated with that decided to become actuaries.

We’re all early 30s.

One of them earns $250k as an FCAS in a reasonable COL city. His job sounds easy, 40 hours a week, no stress etc.

The other got a job in a tax haven, doing something related to pensions and annuities for a private equity company, and gets paid close to $500k. He’s Canadian so he pays 0% income tax. His job sounds fairly stressful but I have to admit, it makes me doubt my decision to not go down that path. He’s currently saving $400k per year and plans to retire at a very young age.

Don’t get me wrong, my career path is great too, but I’m not earning one the big money associated with FAANG etc. I make a nice “above average” income and I enjoy my job.

The actuarial profession is quite broad, in my experience.

For the teams I worked with, memorization of formulas was to their daily work as whiteboard coding would be to the daily work of a sw-eng.

This is 100% a submarine PR article [1] from the Society of Actuaries.

[1] http://www.paulgraham.com/submarine.html

You think? It doesn't exactly make them look good.

Actuarial major here (early 2000s). These exams are indeed quite hard - and if not hard (by someone's personal definition), just cover such a grotesque amount of material for a single exam that by the time you get to the last 20% of the syllabus, the first 80% feels like another lifetime ago.

I have passed three of the SOA (society of actuary) exams, and wrote a fourth and bombed it in ~2005 and never wrote again - returned for a compsci degree instead. Each exam took 300-400 hours of study time. I have nothing but the utmost respect for anyone who is a designated actuary.

Don’t let that sample question in the article fool you; most the exam questions all involve extensive use of integrals, differential equations, and other voodoo I’ve long forgotten to solve problems. Some questions can take upwards of solid page of equations to solve - some are outright dirty tricks with every possible exam answer carefully chosen to be the result of making a mis-calculation somewhere. Even relatively simple discrete mathematical questions can really throw you off in the heat of an exam. Also some questions are put into the exams that aren’t even graded and are “test pilot” questions for future exams, which you can piss away a bunch of time on for no reason at all. Naturally, you're also using relatively basic TI calculators in the exam which help you little in battle.

To be honest, everyone working in science, engineering, data science, actuarial science, or really any numbers-heavy field should be able to answer that first question by reasoning through it. It may be slow, it may require drudging up some distant memories from college, or it may even require a visit to Wikipedia; but if you work with numbers and you can't do that example problem, you owe it to your profession to brush up on your statistics. People not understanding pretty basic statistics like that is a major root cause of almost all the problems in science today (p-hacking, etc.). Many, many statistics problems (including the example) can be solved easily (again: not necessarily quickly) by the basic technique of scribbling out a rectangle or tree of possibilities and the probability of each.

As a math Ph.D. dropout who took the first two exams: the trouble is that you have to solve them quite quickly. The tests weren't too hard for me, but I did have to practice the sorts of problems I would see so that I didn't have to spend too much time thinking. Even then, I didn't walk in feeling like it was a slam dunk.

Is the answer to the question at the top 0.33?

let pc = purchased_collision, pd = purchased_disability

we have:

2 * P(pc) = P(pd) P(pc & pd) = 0.15

P(pc) * P(pd) = 0.15 2 P(pc)^2 = 0.15 --> P(pc) = 0.274, P(pd) = 0.548

So the probability of neither pc nor pd is

!P(pc | pd) = 1 - P(pc) - P(pd) + P(pc & pd) = 0.328 ~= 0.33?

The addition of P(pc & pd) was to take account of the double counting of pc and pd.

Please let me know if I've made a mistake!

I got the same result as you, but in my mind the expression "twice as likely to purchase" could just as easily have meant P(C) = 2 * P(D) / 1 + P(D) (yielding 0.35824) rather than 2 * P(C) (yielding 0.32841).

It is yes.

Definitely need a calculator to be able to do sqrt(0.075) and calculate the result.

Though I was able to figure it out in my head without a calculator by eliminating choice A and choice C (I tried pd=0.3 and pd=0.2 to prove the answer had to be >0.28 and <0.48).

Ah clever!

I did trial and error with some possible numbers until I got really close with .55 and .275… then I used those and got .32625, which was really close to 33%

I got the same. When do we start as actuaries?

I mean, these probably weren't that hard. I was able to solve all of them with just a standard calculator that could do sqrt.

Did you reverse the likelihoods? P(pc) = 2 * P(pd), probability of purchasing C is twice as likely to probability of purchasing D.

In 3 steps:

  I.  P(C) = 2 P(D)

  II. 0.15 = P(C and D)
           = P(C) P(D)   {by independence}
           = 2 P(D)^2    {by I}
      implies P(D) = 0.27

  III. P(~C and ~D)
         = P(~C) P(~D)         {by independence}
         = (1 - P(C))(1 - P(D))
         = 0.33                {by I and II}

Nicely laid out.

I goofed on the last bit by assuming the final answer was:

1 - P(C) - P(D) which gives 0.178 ~ 0.18 or answer (A)

Worth remembering that:

  I.  P(A and B) = P(A) P(B)   {when independent}
  II. P(A or  B) = P(A) + P(B) {when mutually exclusive}

But in general:

  III.  P(A and B) = P(A) P(B|A)
  IIII. P(A or  B) = P(A) + P(B) - P(A and B)

The only way that I and II can both be true is that either P(A) = 0 or P(B) = 0. This does not imply though that A and B are mutual exclusive and independent, but it is a necessary condition. The conclusion is that if you're using both I and II, you're almost certainly doing something wrong.

Yeah, I couldn’t read the article but saw the first question… I got 33%, too.

Was an actuary for 8 years, got my Associateship (roughly halfway through the progression to Fellow). Failed a few of the exams a couple of times, passed a few on the first try. At the time, each exam had a roughly 40-60% pass rate, so by the time you get to the 4th or 5th exam, you are dealing with a pretty smart, invested group...AND it is still difficult to pass.

My job mainly consisted of statistics and data applied specifically to insurance, which I found very boring. I was in life insurance, which is quite simple (people only die once!). Health insurance would have been more interesting, but I am in favor of single payor, so this would have been difficult for me. Property & Casualty (vehicles, property, events, umbrella, custom, etc) would have been the most interesting.

Once I decided to leave, I got an MBA (core courses were trivial due to actuarial knowledge of stats, finance, econ, accounting, etc), and ended up in Analytics/DataScience at tech companies, where my skills transferred quite well.

Congratulations from someone who has passed three of the exams, and then bailed.

I would hire anyone who has passed even a single SOA/CAS exam in a Data Science role in a heartbeat - likely above most other candidates. While I don't directly monitor the "State of the Actuaries", I would have expected the industry to better poise itself as the penultimate "Data Science" candidate-incubator and stretch beyond insurance. I haven't seen an actuarial program that didn't cover computing science as part of degree requirements - and in my case, I also met all degree requirements for BSc Statistics. I did see however the SOA added a predictive analytics exam, exercised in R language.... so that's a start.

/resists urge to bash the term "Data Science" as a Science... because it's really just a combination of {actuarial,stats,cs} which are real science disciplines.

For anyone who thinks about doing these, here are a few tips for the advanced CAS exams.

- Time is your enemy. - Use memorization techniques, like a memory palace. - Grader are looking for key words, be succinct. - If you do not know, skip. Your brain will figure it out while you work other questions. - Create your own study material from the syllabus. Anything that is remotely mathematical will be tested at some point. - Practice being efficient with the tool used to take the exam. Pen or keyboard.

> - Time is your enemy.

Thank you, this explains it. Because as others pointed out, the provided examples should be solvable with anyone with solid basic knowledge of stochastic.

I feel very difficult exams should be commonplace. Everyone should be held to very high standards. It's surprising how many professions don't do this. For example, I've been to several physical therapists who barely seemed to understand what was wrong with me even after several visits. Each gave me what seemed like the same standard routine that they give everyone with <insert pain type here> problem.

I think this is a terrible idea. Exams are terrible proxies for ability to do the work. At best they seem like a measure of intelligence, conscientiousness and maybe memory.

What makes you think that a very difficult exam will improve the ability of your PT?

Investment management is a classic example of this. CFA has a low pass rate (it isn't that hard really, tens of thousands of people do the exam in India and China so that impacts the pass rate), most people do it but, ofc, the really useful knowledge can't be tested...picking a stock isn't like passing a exam. And worse, you get lots of people who pass the exam, acquire false sense of confidence, and then make mistakes (or don't ever move beyond the "parrot" level of intelligence).

I think maths is another one, as conventionally taught. I hated maths at school because it was largely sitting down in a room, doing the same thing over and over again like a computer...quite reasonably, I asked myself whether this was a productive use of my time. As an adult, I have taught myself everything again, it was far more enjoyable and useful because I actually took the time to understand the concepts (and no, none of the stuff I did at school was useful, it was just mindless computation).

I don't necessarily think exams are a bad idea but they don't produce knowledge, experience, or real expertise. They are often misused (as is certification, I knew a guy who worked as a fund manager and was a senior member of the CFA for ethics and standards...he stole from employees regularly).

The body doesn’t have a diagnostic port or log file. Even top-tier doctors are wrong frequently.

Meanwhile, they often gate the requirements to even take the test. It would be chaos (and bad for the law schools) if someone were able to take the bar without a JD (some states have just as lengthy apprenticeship periods replace that) or otherwise prove professional ability acquired via non traditional means.

My grandfather got his architecture license without a college degree (in the 1920s). He often related riding down to Champagne, IL to take the exam in the rumble seat of a Model T Ford with a couple college grads to take the exam. He passed the exam and they both failed.

I was somewhat surprised watching the Perry Mason series on HBO last year when Perry Mason was sworn to the bar without actually going to any sort of law school. Apparently that was the norm until after World War II.

> was sworn to the bar without actually going to any sort of law school.

It can still be done today in most US states.

Also, note that even the self-represented can take on a government and win. See Jim Pattison's (Canadian billionaire) tax hearings vs. the Crown (Canada), which he won after a decade of litigation. Multiple prosecutors and judges retired during that time period.

Besides developing further tax filing methods for his empire, you can bet he wasn't sued again by the government - they hate taking a loss. (The US SEC infamously tries to undermine defendants today by going after their ability to pay lawyers before trials.)

https://en.wikipedia.org/wiki/Jim_Pattison

Seems like billionaire lawyer insurance would be a good market.

> It can still be done today in most US states.

If by "most" you mean 4 or 5 US States (California, Vermont, Virginia, Washington, and maybe West Virginia). That's 10% of states, although more than 10% of the US population (but still a very small minority).

Meanwhile, anyone can represent themselves in court, and with sufficient facts on their side have won. However, the Supreme Court no longer allows people to represent themselves. This means, in the US there are many cases where you cannot take on the government yourself and win.

Even in those states, you can't just show up to the bar exam and ace it.

Thost states all requires you to spend four years (i.e., even longer than law school) working/studying under an attorney. Washington even charges "tuition" of $2000/year.

> Thost states all requires you to spend four years (i.e., even longer than law school) working/studying under an attorney. Washington even charges "tuition" of $2000/year.

I did try to to explain that in my OP:

>>>> (some states have just as lengthy apprenticeship periods replace that)

The over use of occupational licensing has some well documented negative effects, see https://www.econlib.org/library/Enc1/OccupationalLicensing.h... for some points about it.

However, physical therapists already have an occupational licensing exam. You could argue that it’s not hard enough, as it does have a high pass rate for those who have graduated from a PT university program, but then you start drifting into “no true Scotsman” territory.

> The over use of occupational licensing has some well documented negative effects

That's because it's done wrong.

! we just found the guy who knows how to do it right. What a day for humanity!

(include your proposal for improvement to get more positive feedback)

Yes this is true. I realize my comment had the wrong tenor in that the actual exams matter less than just having rigorous courses. Not everyone should be a doctor or a physical therapist or a software engineer and it's common nowadays to credential so that some institution can make money.

Some 17 years ago, I got my teaching credential.

Two observations:

1. The test was ridiculously easy. Junior high–level math and reading. And yet teacher candidates still failed it.

2. For K-12 teaching, the knowledge that was tested was pretty much irrelevant for the job. What matters for more than being able to find the length of the hypotenuse of a right triangle or to comprehend an expository paragraph (which is not to say that these aren't useful skills) is the ability to manage a classroom. Almost none of the teacher prep I had was geared towards that single most important skill (which I, unfortunately, was not so great at) and which is what will make the difference between succeeding and failing in a K-12 teaching career.

I think this generalizes to other fields as well. Think about all the tree-traversal BS we've all gone through in a software engineer interview and how little that relates to the actual work that we do and how the hard stuff is much less the programming and more the learning the code base and business.

It depends… if you set the standards too high, then fewer people are going to be able to do it, and then you either have a shortage or you have to increase salaries to attract more candidates. However, if you are expecting high standards at ALL professions, then even raising salaries won’t fill your candidate pool enough to find sufficient qualified people.

Raising standards won’t suddenly increase the number of people who can meet those standards. It is likely you will just end up with a lot of shortages for important positions.

The standards have to be considered very carefully to find a balance between ensuring enough quality to be effective but not so high that you can’t fill the need.

Exams for positions whose work can apply to the entire organization can be more difficult without significant negative effects. Positions that interface with people (don't scale) suffer more when testing and licensing is too onerous.

For example, physical therapy services would suffer if testing were too onerous for patient-interfacing therapists, but the physicians and researchers who set the direction of the PT program can be examined more thoroughly and this is essentially how medical practice is structured.

Similarly, actuaries, whose modeling and underwriting work applies across the entire financial org, can be tested more rigorously than the financial advisors and customer service reps who are busy with customers, custodians, etc.

Another actuary checking in from Institute of Actuaries Australia - I'm a "qualified" actuary (associate level) who decided to not even try for the fellowship exams and instead change course completely and do a PhD in Machine Learning.

No one outside of the actuarial industry cares or really knows what it means to be an actuary. Having an actuarial background in non-traditional actuarial areas is almost more of a curse than a blessing as people don't really know what to do with you. Furthermore actuaries seem to demand a premium for a cohort that don't have strong enough grounding to do ML research or enough development chops to be an ML engineer. So you end up competing with other people in the data science field...It really is a weird position to be in.

Out of curiosity, what do you think industry could/should be doing with actuaries that it currently isn't? Other than just recognizing their credentials as a signal of a strong data scientist.

Hated/Loved doing the exams to get my FCAS. It allowed me to explore my mental capacity. It teaches you how to learn fast, how to memorize, how to be quick at solving problems.

It has been a while, but after getting involved with the exam question writing/grading part, I felt the CAS was too entrenched in their processes. I stopped paying my dues since I did not plan to sign any acturial statement anyway.

I now do data engineering for other actuaries and maintain our tech stack. Think rating engine and ML in production. Code is mostly on github now, we have peer reviews, deploy to kubernetes. It is really is no different than SWE, except we know a lot more about the business side.

Life is great work wise.

If the sample question is actually representative of the exam, I'm surprised that people that actually study for this fail that often. I haven't had any statistics education since high school, and found it fairly straightforward to solve.

Years ago, I looked at sample questions for the probability exam, which most people take first. To get a passing score you had to be able to quickly recall different probability distributions and also you needed to have a pretty solid grasp of the mechanics of things like double integration. Intro calculus-based mathematical probability classes cover most of the material, but passing the test requires mastery of at least the applied side of math probability.

It's an actual exam question from the first exam, but it's one of the easier ones. IIRC the syllabus is something like 40% discrete probability and combinatorics, 40% univariate continuous probability, and 20% multivariate probability. But it's not like WSJ is going to expect its readers to do tabular integration in the margin.

In general that exam is pretty representative of the syllabus of my mid-level undergrad probability theory class. The failure rate is somewhat inflated because students will walk right out of their probability class into the exam thinking they can pass without further studying. It's still harder than a typical undergrad exam, but it's nowhere near the level of the Putnam or whatever.

Actuary here, having previously studied maths. I considered the exams hard not because of the level of understanding needed, but because of the amount of content that needed to be learned for each exam. I think most people studying A level maths can pass the exams.

The red/blue urn question in the article isn't super duper hard right? It's at a level where it's a very hard question (but still doable) for a 16 year old high schooler I think?

b = number of blue balls in second urn.

P(both same color) = P(both blue) + P(both red) = P(first urn red) * P(second urn red) + P(first urn blue) * P(second urn blue)

0.44 = 4/10 * 16/(16+b) + 6/10 * b/(16+b)

Multiply both sides by 10(16+b) and simplify:

b = 4

I just plugged in numbers until I got it to be .44. I tried 2, 3, and 4, and then found the answer without needing to simplify

Even easier since the test itself is multiple choice.

I passed one of the actuary exams (P) after college after taking <$many> applied stats classes. I'm glad I did because it gave me a very good intuition for conditional and bayesian probabilities. I'm sure I wouldn't pass it if I took it right now, and I would never want to study for the other exams, but I think this one was a real win that taught transferable skills.

If it took a math professor over 3 years to do it, it sounds tough. What is the reward? I consistently see actuarial science as a top earning degree in certain papers, but there's not much color on whether it's worthwhile. How many openings are there for each person who passes, what are working conditions like?

> How many openings are there for each person who passes

Think of the SoA as a union, if that helps.

> what are working conditions like?

It's a boring office job.

The job is what it is. A safe and well-paid job that guarantees you'll never be a pauper or a prince. Not dissimilar from university teaching.

> Not dissimilar from university teaching

You...may want to look at the state of the academic job market.

I considered becoming an actuary after college (passed first two exams on first try) but decided to become a software engineer instead. You should expect to make six figures with a near guarantee of employment for your entire career. The job conditions are fairly standard for a white collar worker, but you won't have crazy working hours like a lawyer or a banker.

If you could take the tests in parallel the process would be a lot quicker, but the tests are sequential (you typically need to take 7 to be fully certified) and are only offered every 3-6 months. I didn't think the first two exams were particularly difficult, but did prep for about a month for each beforehand. I would argue that time management was more important since you had only a few questions but were on a strict clock. So if you actually wanted to pass the test it was more important to find shortcut methods to get to the correct answer quickly.

Thinking back as a math major who took a couple of exams, it’s an utterly outdated and dying career path. And it boggles my mind why they kept recommending such a narrow path to math majors.

People who are smart enough and know enough math to pass these exams can make a lot more money in investment banking or data science. I’m shocked student still go this route

I cannot read the full text, but from the first paragraph, how is an exam considered very difficult if you think you can pass it with 2 month preparation?

Might I suggest https://12ft.io for you?

Fun fact - of all the professions, marriages with an actuary have the lowest divorce rate. Bartenders have the highest.

The real question I want to know is; how applicable are the hard earned skills elsewhere, say data science?

Probability and statistics is applicable everywhere. But the actuarial route is overly specialised for the insurance industry.

The ideal data science degree would be computer science and statistics combined. Drop compilers, formal methods, etc. Keep databases, PL, AI/ML, data structures & algos. From stats you get probability, inference, survival analysis, stochastic processes, design of experiments, etc. Throw in some operations research (optimisation) while you’re at it. Comp Sci, Financial Math, Statistics all do the same mathematical track anyway: LA, Calc, Real analysis, Discrete math. I would include a good course covering advanced probability so something based on measure theory.

Now you have a general Data Science background to apply in any field.

I registered neoactuary.com one day as I wanted to start this weird mixture of HN + finance/math etc.

20 years ago i had such hopes to run into that field but man am i glad something else happened (2008)

The urn problem ("Calculate the number of blue balls in the second urn.") just assumes that the balls in the urns are randomized. If not, then the formula they solve with doesn't work. (If the 4 blue balls are underneath the 16 reds...)

I'm a student at the Actuarial Society of South Africa. I have been for the past 20 years. This demo question, while not easy for a non-technical person, should be a piece of cake for someone who has completed the initial few technical subjects of the curriculum, the core technical series of subjects. I actually think any numerical calculation isn't a very good example or benchmark of what a good actuary should know or be.

Most students who start Actuarial Science here are mathematically strong and getting through the technical subjects just needs dedication to study and know the numerical theories and proofs.

It's the latter subjects that are the really difficult ones. They are wordy questions and answers. The exams don't necessarily exclude numerical calculations, but if calculations occur, it will be relatively simple (compared to the initial subjects). Exams of the final subjects require you to think out of the box and questions often involve areas that weren't included in the subject's literature. You are expected to apply your knowledge of earlier subjects to a novel scenario and propose solutions that you can't study for ahead of the exam. You can practise using past exam papers, but your exam is guaranteed to throw you a real curveball.

Example: F202 LIFE INSURANCE SPECIALIST APPLICATIONS

November 2021 Exam [1]

November 2021 Examiner's Report [2]

And this is the test of a true actuary. Is he/she a problem solver and not just a number cruncher? (It's also why I haven't been able to qualified yet.)

I remember in my first year at university a professor claimed that the actuarial science curriculum is like initially learning the basics of the decimal number system. 10 digits, 0 to 9, carry over or borrow digits from the neighbouring power of 10. 0 is a placeholder, etc. Then, in your final exam, you see a question: Design an abacus. You have all the knowledge, but now you have to apply it.

We all thought he was exaggerating to scare us. 20 years later, I'm totally on board with him. It was a realistic analogy.

[1] https://www.actuarialsociety.org.za/download/f202-november-2...

[2] https://www.actuarialsociety.org.za/download/f202-november-2...

So the answer to the question in the topic is (B) ~0.33 (can't see the answer because of the paywall)?

Doesn't seem to be a particularly tricky question unless I miss something, just basic probability theory calcs.

That was my answer as well: My reasoning: Let x be the probability of purchasing disability coverage, thus the probability of purchasing collision is 2x from conditions b and c, we know that 2x∙x = .15 so we can calculate the probability of neither applying as 1-(2x+x)+2x∙x = .18 + .15 = .33

I can see the trap of forgetting to add 2x∙x in the calculation (since we don't want to double count the case where they purchase both insurances). And choices d and e follow from forgetting to subtract the probability of purchasing either from 1 (and making the same mistake of not removing the double count). I'm curious where the .48 distractor comes from. Coming up with good distractors is the secret to making a multiple choice test hard (students tend to think that multiple choice will be easier than a fill in the blank test, but they forget that with free answer exams, they can still get partial credit where in a multiple choice test, they'll lose all credit for a small mistake).

> with free answer exams, they can still get partial credit

Rarely had a prof that had the patience for that, vs. a simple red X. Not arguing, it's just my anecdote of frustration.

I taught a lot of high school/junior high math for college students back in the day and typically the midterm exams and quizzes would get partial credit and the final was multiple choice. We had very specific rubrics for partial credit grading and this was typical of the classes that I took as well.

It bugs me that they give you sample questions, but they don't lay out how you can solve it. I think it's still calculators, pen and paper, but ... that's the kind of detail that matters.

At least for the sample questions on the article, you could easily answer those after taking an intro stats course.

It was extremely misleading for the author to list questions from exam P as if they were representative of the exams at a large. I'm an actuary, and I passed that exam with a 10 (maximum grade), with a nights review of my probability class notes.

Then I failed my next exam twice. The first couple exams are very simple, and then it ramps up considerably.

As others have mentioned, the hard part of these exams is not the individual material, which is never far beyond undergrad level, but the sheer quantity of it. It's also very unmotivated in some cases, so it's hard to piece together a full picture of the material that you're trying to learn.

Looks like three weeks into 101 probability theory.

i can see how people would get this wrong

the actual answer is .328

You would thank actuaries would care about accuracy beyond the 2nd decimal point.

> Want to be an actuary? Odds are, you’ll fail the test

The article is paywalled, so I can't tell if the irony is intentional.

Anyone even thinking of taking actuarial exams should understand that since exam results are non-random, statistics based on the general population are not predictive of specific results.

For many instances of "you" the odds are they will pass.

Aside from the paywall, this is quite an easy problem. Highschoolers with a math focus should be able to solve this.

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