Posted On: May 29, 2008, 10:55 am CDT

Posted By: Buckeye

I have to admit that reading this littany of posts is interesting, but also very amusing. Black vs. white. Poor vs. rich. Male vs. female. We need to be get our collective head out of the sand and, very simply, be honest.

We could back into any conclusion we want, especially if one's agenda makes it politically expedient or, better yet, if there is some economic benefit behind one's political agenda. Follow the money trail? I'm sure I could even back into a conclusion that rich white guys are somehow being discriminated against by credit scoring if I had the time or inclination.

There are a few inconvenient facts that get in the way of looking at this rationally. Credit scoring works...plain and simple. McCarty and other boorish detractors know it (McCarty even said it in his testimony for that matter), but they just don't have the stones to support it because, let's face it, politically protected groups might have to pay higher premiums. Truth be told, if a group happens to be disproportionately represented in the credit score layer proven to generate more losses, then that is simply a reality the group must face. The individuals (that's right, individuals) within the group do, in fact, have the ability to improve their respective credit scores for which they are solely responsible.

Also, the underwriting process at the core of the insurance business is an extremely discriminating exercise. It has to be in order for the carrier to make good business decisions, generate revenue and, ultimately, a profit.

Insurance is nothing more than a financial transaction in which the insured transfers his/her risk to an insurance company for a premium deemed to be commensurate with the amount of risk. The insurance company is not alone in determination of "commensurate" since the insured has the ability to shop to other carriers if he/she believes the premium is excessive. If a carrier has a propensity for charging excessive premiums (which is perceived by some to be prevalent in the industry as suggested in previous posts), then the carrier will not likely generate sufficient revenue to sustain its operations.

I was raised in a white, blue collar household in a large urban area. I went to school for twelve years with kids across the socioeconomic spectrum: black, white, poor and rich. We sat in class next to each other for twelve years and had the same road blocks in front of us. We also had access to the same opportunities. I made choices that disregarded the road blocks and allowed me to take advantage of the opportunities. I am very middle class, but would be considered by some political standards as nothing more than a rich white guy who has had life very easy.

As a rational and honest individual would expect, my neighbors and classmates from my childhood also made choices....some good, some not so good and some bad. Their skin color, gender or economic status did not dictate their current lot in life. Rather, the choices that they made were the driving force.

Unfortunately, a legitimate and valid business decision such as credit scoring is nothing more than a political football for many. Capitalism works. Profit is not a bad word. Credit scoring is nothing more than the manifestation of capitalism and a drive for profit by responsible businesses in the insurance industry. Some of us have work to do in the real world, so I ask all of you crying foul about credit scoring to simply get out of our way and move on to some other social cause.