My guess would be that it is a proxy for income. As far as i am aware credit bureaus do not have access to information about how much a person earns. However if you are paying off a $2k mortgage each month, then the assumption is made that you have either enough funds or income to afford it. Once you pay off your loan it becomes a black box again, as there’d be no way of telling whether or not this is still the case.
Makes sense to me, but from the opposite direction. In a capitalist market, the price of things is whatever customers are able to pay for them, not what it costs to make them. Everything above cost is profit. (If the cost is higher than what customers are able to pay, then the thing is simply not made.)
If the insurance company knows you’ve just paid off your mortgage, that means you now have an extra $2k a month in disposable income. You are able to pay for more things, OR pay more for the things you have, therefore this is the best time to raise the prices on you, capture that income back to the insurance company. Short of government regulation dictating specific insurance prices, they will do what’s in their interest.
In a truly free market with infinite competition, one insurance company couldn’t raise prices arbitrarily because any other would swoop in and undercut it. But when insurance is an oligopoly composed of only a few companies, they can all just raise the price on you all at the same time. Plus, switching insurance is laborious for you.
Could be something like that too, yea. Getting a mortgage means the bank, which does know your financials at that time, approved of the loan, and then continued payments without delinquency would indicate that your finances have not made a turn downward.
My guess would be that it is a proxy for income. As far as i am aware credit bureaus do not have access to information about how much a person earns. However if you are paying off a $2k mortgage each month, then the assumption is made that you have either enough funds or income to afford it. Once you pay off your loan it becomes a black box again, as there’d be no way of telling whether or not this is still the case.
Makes sense to me, but from the opposite direction. In a capitalist market, the price of things is whatever customers are able to pay for them, not what it costs to make them. Everything above cost is profit. (If the cost is higher than what customers are able to pay, then the thing is simply not made.)
If the insurance company knows you’ve just paid off your mortgage, that means you now have an extra $2k a month in disposable income. You are able to pay for more things, OR pay more for the things you have, therefore this is the best time to raise the prices on you, capture that income back to the insurance company. Short of government regulation dictating specific insurance prices, they will do what’s in their interest.
In a truly free market with infinite competition, one insurance company couldn’t raise prices arbitrarily because any other would swoop in and undercut it. But when insurance is an oligopoly composed of only a few companies, they can all just raise the price on you all at the same time. Plus, switching insurance is laborious for you.
Could be something like that too, yea. Getting a mortgage means the bank, which does know your financials at that time, approved of the loan, and then continued payments without delinquency would indicate that your finances have not made a turn downward.