Posted On: December 27, 2005, 2:23 pm CST

Posted By: Some guy

You should reread what Garamendi said. Obviously, carriers can prove that zip code is a significant predictor of loss, just as credit scoring is. "then why can't that factor be used to determine rates?" He's not saying it can't. What he's saying is that the Post Office does not draw zip code boundaries for the accurate determination of insurable risk, and because of that, some people in one section of a zip code pay more than they should, subsidizing other people in the same and other zip codes. He's actually asking carriers to be more precise.

"What Garamendi really wants is for the good risks to subsidize the less-than-desirable risks..." Perhaps. But he is also responding to consumer frustration, the same frustration that credit scoring causes. Ultimately, the best solution would be for a carrier to target the zip code boundary market with better pricing, and leave adverse selection to the lazy carriers.