Had a debate the other night about auto insurance and the government’s role in it with a few interesting points that I think are worth repeating. The crux of the issue revolved around mandatory (rightfully so) liability insurance for all drivers. The problem is, we’re required to purchase said insurance from private companies. Said companies, in the interest of making a profit, necessarily profile clients on the basis of statistics - hence why sixteen year old males driving red 2-door cars pay a fortune. I imagine most people would be understandably upset if this sort of profiling occurred in other aspects of governance (say, by police officers), but because insurance companies are private entities, they have free reign over their pricing policies. Ideally, competition and the market should result in some sort of ostensibly fair equilibrium - but in this case, the market is unnaturally skewed by the law mandating that everyone buy it. The government is thus in de facto support of all kinds of discriminatory policies.

In this situation, there are two logical options if you want to keep things fair. You can let anyone who wants to act as an insurer, thereby creating true market competition. There are all kinds of problems with this one, so there’s not much point in even considering it. The default alternative, is to have the government offer insurance at a baseline cost commensurate with its true price (non-profit!), statistical liabilities based on profiling notwithstanding. Obviously, should you prove the statistics true, you’ll be hammered with the full weight of increased premiums. But that makes sense.

As it stands, we’re guilty until proven innocent. So when do you turn 25?