SAN FRANCISCO — The world is a dangerous, unpredictable place — not a bad thing, perhaps, if you’re 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, and slowly but surely disrupting the financial core of the insurance business.
Take the old saw that younger drivers are always the riskiest to insure, for example. Is it always true?
“A 22-year-old driver who parties a lot and drives 10,000 miles a year, or a 40-year-old teetotaling mom who drives 40,000 miles? I might think the mom is riskier,” said Dan Preston, the chief executive of Metromile. “Speeding a lot or braking hard, unless you’re going 100 miles an hour, it doesn’t make much difference.”
Instead, all those extra miles the mother is safely and soberly driving mean she is more often where the accidents are happening. Or, as Mr. Preston put it, “Seventy percent of the variants around expected losses can be derived from mileage.”