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Technology allows cost effective way for micro segments of target under insured. An interesting article to read on fintech and insurance sector.

Technology changing the way insurers calculate risk

SAN FRANCISCO — The world is a dangerous and unpredictable place, which is not a bad thing, perhaps, if you are in the business of selling insurance, making loans or figuring out ways to prevent mishaps. But these days, technology is changing some of the calculations around risk, whether for car insurance, life insurance, flood insurance or even vacation-related accident insurance, slowly but surely disrupting the financial core of the insurance business.
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http://www.todayonline.com/tech/technolo...ulate-risk

Maybe in competitive markets in US, better segmentation will lead to cheaper premiums for better risks.

In SG, the better data segmentation will lead to higher premium for worse risks, butt same price for the rest.

Example: the credit bureau, Govt said the credit bureau will lead to better rates for good borrowers. Where got. More like no credit for bad risks.

haha!

true, biz is like that, kick out the bad, skim the rest!

(08-04-2016, 12:21 PM)opmi Wrote: [ -> ]Maybe in competitive markets in US, better segmentation will lead to cheaper premiums for better risks.

In SG, the better data segmentation will lead to higher premium for worse risks, butt same price for the rest.

Example: the credit bureau, Govt said the credit bureau will lead to better rates for good borrowers. Where got. More like no credit for bad risks.

I like your example and reasoning.

Another one that I can think of is the auctioning of pledged items from pawn shops. By doing away with the system, they are increasing the profit of pawnshops by having an opaque process and reducing the bargaining power of the pledge holder. Govt simply assume that lowering the costs of the pawnshops will automatically reduce price for loans charged by pawnshops... they are very naive to think that pawnshops operate simply on cost plus basis.....