Posted On: January 29, 2008, 3:23 pm CST

Posted By: Ratemaker

Insurance pricing is not about "fairness" in that sense - It's about actuarial equity. If you filed a claim last year, you're more likely to file a claim this year. If you have a lot of speeding tickets, you're more likely to file a claim. If you have lousy credit, you are more likely to file a claim. If insurers do NOT use the data elements that are available to them that have been shown, in the aggregate, to predict losses, that's not "fair" to someone.

Also, credit ain't wealth. Credit scores as used in insurance are based on debt/limit ratios, number of inquiries, late or missed payments, etc. The overall credit limit and income do NOT enter the score. Low-income people can have good credit ratings. High-income people can have lousy ones.

Third, even if credit were just "rich guy pays collision costs out of his own pocket," SO WHAT!? The insurer is trying to predict the claims dollars it will pay, not the overall loss that will occur. There's a subtle difference, but it's an important one.