Posted On: January 29, 2008, 11:40 am CST

Posted By: lastbat

wudchuck, since underwriters look at loss-ratios, from their point a better credit rating does equal better risk. It's less of a risk to insure somebody who is never going to use the insurance company's money than it is to insure somebody who will use the insurance company's money. It's not that the rich guy is a better driver, he just costs less to insure - by definition a better risk.

This of course avoids the issue that the rich guy will eventually, according to statistics, get into a fatal accident as a result of his bad driving and the other guy probably won't. But if the fender-benders are never reported to the police, the insurance company wouldn't have that data to base their risk calculations on, so would have to go with who is going to cost them less in pay-outs.

I'm not saying it's morally right, but it makes sense when looked at from a pure-risk sense.