A person\’s occupation and education generally demontrates that person\’s financial responsibility, and aren\’t auto insurance policies a result of the state\’s financial responsibility laws? I think this measure in rating for personal auto (and other personal policies) is an extremely credible and reasonable factor to be used in risk assessment. Would one not expect that someone with more to lose financially – say a physician – would drive more responsibly than one with less to lose — say a restaurant service worker? If race has shown up as an underlying factor in the state\’s assessment, that is a reflection of economics and not the fault of the insurance companies.
So Alex Cink says \”Rates should be fair and based only on actual risk\” and yet in the same article it\’s stated that this puts other companies that don\’t use occupation/education at a \”disadvantage\”. Would it be a disadvantage because companies that use it have discovered lower loss costs and companies that don\’t use it will attract customers with higher loss costs? Seems like that makes it a relevant factor to me. What is an \”actual risk\” anyway? Alex Cink throws the terminology around loosely and she certainly doesn\’t know what it means. Here\’s why it\’s fair: it\’s not race based, the insured has control over this underwriting variable, and it gives us all the chance to aspire to the lowest rate level available. Why don\’t we remove the current underwritng variables that the public can\’t control: age & gender. The auto market is highly competitive. The Fl OIR is determined to ruin it.
Both of you made such clear and helpful remarks on this topic that any child ought to be able to understand the issue. I honestly think that some of the people who oppose such underwriting criteria are being disengenuous.
Do the rating attributes single out minorities? I would suggest there are a larger number of white people in lower paying occupations with lesser educations. Are there a larger percentage within minority groups with lower educations and lower paying jobs, or is that speculation? Let\’s have the facts.
The use of occupation as a rating factor in this situation is not based on observed risk. If there were observable data that showed white collar workers were statistically safer drivers, with lower claim payouts than your average blue collar or manual laborer we would not be discussing this matter. To assume that higher income correlates to lower claims frequency and payout ignores other important factors. To use the example of the doctor and restaurant worker, wouldn\’t a doctor typically drive a much more expensive car, work longer hours and have more access to narcotics, and be more prone to sue and be sued if involved in an accident?
As has been pointed out, a doctor has shown himself to be less risk averse than the kitchen help because he has much more invested in his life than the dishwasher has. The dishwasher goes to jail for brawling or D&D, and gets another dishwashing job when he gets out. The doctor is ruined. The same goes for driving risks. Plus, the cost of the car is not only accounted for by the premium, but is indicative of the owner\’s care in accruing and prudently managing money.
There is such a thing as envy, its corellary is guilt. A) I envy the doctor so I want him to suffer. B) I feel guilty because I have things the dishwasher can\’t afford. Since I am not going to give the dishwasher anything, I must force the doctor to pay something to the dishwasher, which in some perverse way I do not quite understand, makes me feel better.
Insurance companies are not in business to lose money. Nor do they have any incentive to invent crazy criteria for underwriting that has no real-world benefit to their business. Their mistakes are unforgivingly corrected by market forces.
Forcing people\’s business decisions to comport with liberal political values is always bad business for everyone.
I\’ve read all the posts and thank you for your insight.
However, I am still not convinced on one aspect. I really don\’t see what occupation has to do with the way a person drives (that is not to say I do not think carriers should be able to charge premium accordingly). I have seen plenty of people with nice cars who drive like they are the only person on the road (excessive speeding, weaving, cutting people off, tailgating, etc.). I am sure they don\’t want their expensive cars hit; huge dents in BMW\’s do not increase their value. I have seen people in beat up cars drive the same way. Generally, I *feel* it\’s the arrogant, selfish or just plain STUPID drivers (great jobs or not so great) who are risky. These are the people who drive recklessly. If someone is \”just a dishwasher\” why do you think that means they would drive more recklessly than a doctor? They could have a family, kids, etc. Just because they are dispensable at their job does not mean they are themselves dispensable.
I think the use of credit reports is a better idea because it shows how people handle themselves (RESPONSIBILITY). However, occupation/education is a legal way to rate business, so Alex Sink needs to get over it (IMHO). If someone gets a discount because they have a better job/education, whatever. I won\’t complain about it. I have no time to whine about things like that.
We can equate this to a good student discount program, right? If a student gets good grades, there is a discount. Same principle, right?
I think your point about the good student discount is very relavant indeed! I do not believe that every doctor is a safe driver and every dishwasher is a poor driver, nor is every straight A student a great driver and the F students bad drivers. These criteria are one of many going into rating an auto policy. The most critical aspect of all is the driver\’s MVR. Next thing we know, Ms. Sink will be trying to take that one away too!
None of our carriers\’ rating systems ask what the applicants\’ occupations are. Can anyone tell me which auto carriers are asking for this information? Credit rating, MVRs and prior claims rule.
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A person\’s occupation and education generally demontrates that person\’s financial responsibility, and aren\’t auto insurance policies a result of the state\’s financial responsibility laws? I think this measure in rating for personal auto (and other personal policies) is an extremely credible and reasonable factor to be used in risk assessment. Would one not expect that someone with more to lose financially – say a physician – would drive more responsibly than one with less to lose — say a restaurant service worker? If race has shown up as an underlying factor in the state\’s assessment, that is a reflection of economics and not the fault of the insurance companies.
So Alex Cink says \”Rates should be fair and based only on actual risk\” and yet in the same article it\’s stated that this puts other companies that don\’t use occupation/education at a \”disadvantage\”. Would it be a disadvantage because companies that use it have discovered lower loss costs and companies that don\’t use it will attract customers with higher loss costs? Seems like that makes it a relevant factor to me. What is an \”actual risk\” anyway? Alex Cink throws the terminology around loosely and she certainly doesn\’t know what it means. Here\’s why it\’s fair: it\’s not race based, the insured has control over this underwriting variable, and it gives us all the chance to aspire to the lowest rate level available. Why don\’t we remove the current underwritng variables that the public can\’t control: age & gender. The auto market is highly competitive. The Fl OIR is determined to ruin it.
Both of you made such clear and helpful remarks on this topic that any child ought to be able to understand the issue. I honestly think that some of the people who oppose such underwriting criteria are being disengenuous.
Do the rating attributes single out minorities? I would suggest there are a larger number of white people in lower paying occupations with lesser educations. Are there a larger percentage within minority groups with lower educations and lower paying jobs, or is that speculation? Let\’s have the facts.
The use of occupation as a rating factor in this situation is not based on observed risk. If there were observable data that showed white collar workers were statistically safer drivers, with lower claim payouts than your average blue collar or manual laborer we would not be discussing this matter. To assume that higher income correlates to lower claims frequency and payout ignores other important factors. To use the example of the doctor and restaurant worker, wouldn\’t a doctor typically drive a much more expensive car, work longer hours and have more access to narcotics, and be more prone to sue and be sued if involved in an accident?
As has been pointed out, a doctor has shown himself to be less risk averse than the kitchen help because he has much more invested in his life than the dishwasher has. The dishwasher goes to jail for brawling or D&D, and gets another dishwashing job when he gets out. The doctor is ruined. The same goes for driving risks. Plus, the cost of the car is not only accounted for by the premium, but is indicative of the owner\’s care in accruing and prudently managing money.
There is such a thing as envy, its corellary is guilt. A) I envy the doctor so I want him to suffer. B) I feel guilty because I have things the dishwasher can\’t afford. Since I am not going to give the dishwasher anything, I must force the doctor to pay something to the dishwasher, which in some perverse way I do not quite understand, makes me feel better.
Insurance companies are not in business to lose money. Nor do they have any incentive to invent crazy criteria for underwriting that has no real-world benefit to their business. Their mistakes are unforgivingly corrected by market forces.
Forcing people\’s business decisions to comport with liberal political values is always bad business for everyone.
I\’ve read all the posts and thank you for your insight.
However, I am still not convinced on one aspect. I really don\’t see what occupation has to do with the way a person drives (that is not to say I do not think carriers should be able to charge premium accordingly). I have seen plenty of people with nice cars who drive like they are the only person on the road (excessive speeding, weaving, cutting people off, tailgating, etc.). I am sure they don\’t want their expensive cars hit; huge dents in BMW\’s do not increase their value. I have seen people in beat up cars drive the same way. Generally, I *feel* it\’s the arrogant, selfish or just plain STUPID drivers (great jobs or not so great) who are risky. These are the people who drive recklessly. If someone is \”just a dishwasher\” why do you think that means they would drive more recklessly than a doctor? They could have a family, kids, etc. Just because they are dispensable at their job does not mean they are themselves dispensable.
I think the use of credit reports is a better idea because it shows how people handle themselves (RESPONSIBILITY). However, occupation/education is a legal way to rate business, so Alex Sink needs to get over it (IMHO). If someone gets a discount because they have a better job/education, whatever. I won\’t complain about it. I have no time to whine about things like that.
We can equate this to a good student discount program, right? If a student gets good grades, there is a discount. Same principle, right?
Jewel,
I think your point about the good student discount is very relavant indeed! I do not believe that every doctor is a safe driver and every dishwasher is a poor driver, nor is every straight A student a great driver and the F students bad drivers. These criteria are one of many going into rating an auto policy. The most critical aspect of all is the driver\’s MVR. Next thing we know, Ms. Sink will be trying to take that one away too!
None of our carriers\’ rating systems ask what the applicants\’ occupations are. Can anyone tell me which auto carriers are asking for this information? Credit rating, MVRs and prior claims rule.
Well, Geico got sued for using Occupation and Education for underwriting in New Jersey, so they probably use it in Florida as well.