Low Income Insureds Rated Unfairly ?

A few years back I was part of a team of authors that wrote a book on credit scoring. The credit scoring model was realatively new and was getting a lot of attention. Our research showed that the alogirithms used were actuarially sound as low income folks with bad credit scores deserved higher rates. However this did not go over well with State regulators. Now, 5 years later , credit scoring is still being used to determine rates. Unfortunatly low income folks are still being adversely rated due to poor credit. Is this fair? just because the math shows higher rates are necessary, does the method discriminate? Is the credit score model putting low income drivers with excellent loss ratios into a basket of bad drivers? The debate is raging and will probably continue over the forseeable future. I thought by this time the argument would be decided, but it looks like time has only made it worse. Lets see what the next few years show. Until next time be careful out there and know your risks. K


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