The graph does not surprise me. I am however sceptical that this is due to the sunk cost fallacy -- I consider it much more likely that previously unreported damage is reported near the end of the policy as a 'new accident', possibly right before the policyholder changes their insurer. There are clear signs of this in the data ("conditional on an accident occurring, it incurs lower payments from the insurance company on average and is less likely to cause bodily injuries if it occurs in the last month than if it occurs in other months." -- ie the vehicle was still drivable and/or damage was minor).
At autonomous level 3 or better, what does the actuarial math look like for future car insurance premium ? 🤫
Good question. My guess is insurance premiums would go down :-)
The graph does not surprise me. I am however sceptical that this is due to the sunk cost fallacy -- I consider it much more likely that previously unreported damage is reported near the end of the policy as a 'new accident', possibly right before the policyholder changes their insurer. There are clear signs of this in the data ("conditional on an accident occurring, it incurs lower payments from the insurance company on average and is less likely to cause bodily injuries if it occurs in the last month than if it occurs in other months." -- ie the vehicle was still drivable and/or damage was minor).
That is a very good point. I haven't thought about that! Smart 👍