“The challenge that insurance companies face is that since they do not have the same information as drivers, they must set higher insurance premiums that consider the average risk of drivers,” says Jordan Van Reign, assistant teaching professor and MSPO Associate Director, Department of Agricultural & Applied Economics (AAE), University of Wisconsin–Madison. “If insurance companies could have the same information about risk as drivers, they could set individual insurance premiums that better match the risk of each individual. This would improve overall market efficiency by reducing overall rates and better matching rates to the risk of individuals.”
University Communications