Posted On: January 16, 2007, 6:17 pm CST

Posted By: Ex Geico

I disagree with your logic. Any factor that accurately identifies risks that are likely to cost more more fairly proportions the costs across the spectrum of risks. Look at it from the perspective of the consumer who pays the lower premium because they represent, regardless of reason, a lower risk of claim. Isn't unfairly discrimintory to not charge them the lower rate it has been proven they deserve?

As far as the bus example, it isn't an applicable analogy. Bus service is generally a government subsidized benefit for the population. Insurance isn't and shouldn't be due to the morale and moral hazards that would be incurred. I suggest better examples would be:

Taxi - Charges by the distance segment, risk, based on costs to get there plus a reasonable profit.

Landlord - Charges a higher rent and security deposit based on the assumed greater risk of a tenent with a pet.

If you were to privatize the bus service and have that service have certain buses carry engineers and others carry (assumed)dirty roofers, all other being the same or otherwise mitigated, over time the bus company would charge a higher rate for the roofers in order to compensate for its higher costs.

Auto Insurance is a funny product: A promise to pay for a loss that is at least partially controllable by the insureds actions. You can't socialize it for the reasons mentioned above, Massachusetts and NJ proof positive, but if you make it completely objective (fairly discriminatory)someone -class is going to suffer, pay more. The leftover question is are the risks paying the premium for the risk the represent? Regardless of anything subjective a yes answer to that can be the only acceptable solution...