On average you will pay more, but not all at once, which may be prohibitively expensive. There will still be value in insurance.
It’s just a thought experiment, but the more information they have on us, the more relevant it becomes.
Perfect information means they know your risk level to the best possible accuracy, which would really only apply to populations.
Perfect information means they insure 1000 people and predict they’ll have one bad accident per year. After ten years they covered for ten accidents. All ten could have occurred in the first year and they would still be correct.
That’s why it’s a thought experiment, and not real life.
> Perfect information means…
No, that’s not what was meant by perfect information in this instance.
It’s hyperbole of sorts, but it highlights that until such a time, raising the cost of insurance doesn’t just punish the people who actually cause the damage.
The personal risk component can be accounted by “perfect” information and that component can get bigger or smaller depending on your definition of perfect, but there’s another component which can’t.
Maybe you could argue you shouldn’t have to cover medical expenses if we had a single payer system—the money to mitigate medical risk from driving still has to come from somewhere.
Maybe you could argue that damage to property should come from those property owners’ insurance.
What if you don’t get into a terrible accident, you just get into a boring accident where you total your car and don’t hurt anyone. You know the odds of this are low, chances are it won’t happen in your life, but it will probably happen to someone you know. What if it happens to you, when you’re very young and have a new car? You haven’t had a chance to put away any money in your piggy bank yet. You need to replace your car now. How does a piggy bank help you?