Contrary to “Insurance commissioner is right” (Our Readers’ Views, Dec. 15), the use of credit history by the insurance industry is not “ethically bankrupt.” Since 1945, every state insurance regulation requires companies to provide rates that are “adequate, not excessive and not unfairly discriminatory.” Fair discrimination is merely the recognition that different groups have different loss propensities.
Working as an actuary for a small insurance company, I was responsible for overseeing the data analysis to guarantee those fair and adequate rates. The introduction of credit history provided an astonishingly significant correlation between loss history and credit score. This was much more highly correlated than address, driving history, driver age, etc. By ignoring (or disallowing) this rate variable, our politically motivated insurance commissioner is condemning those of us with responsible behavior to unfairly subsidize those who are less responsible.
We should all strive to have a rate plan that encourages insurance companies to be happy to accept any potential customer, because they all generate the same potential for a profit. Without at least breaking even, insurers would not be around to pay the losses we hope we don’t have, but inevitably do. Just further evidence that facts don’t matter to some people — only equal outcomes, whether or not “equal” is fair.
