Full Coverage Government

[Ziggurat]

Your credit score is an indication of your ability to repay a debt. It is NOT indicative of your driving ability.

And as I've pointed out repeatedly, driving ability is not the primary risk factor. Judgment is. And if you don't understand how that might be correlated with credit scores, well, you don't know anything about people.

That some, or even most, people with bad credit scores are likely to make claims, it is NOT a guarantee that you will.

Nothing is a guarantee that you will. Not even past driving record, which you're willing to use. All of it is probabilistic. That's what risk means.

That would be a form of discrimination- http://dictionary.reference.com/browse/discrimination[]

"treatment or consideration of, or making a distinction in favor of or against, a person or thing based on the group, class, or category to which that person or thing belongs rather than on individual merit"

Guess what: your past driving record put you in a category. You are advocating treatment based on this category. You are, by your own definition, advocating discrimination.

But all of this is, in fact, rather beside the point. If you want insurance to only discriminate based on some specific set of criteria, well, you can pass laws to make that happen even with private insurance. You don't need to socialize insurance to do it. Your arguments for why socialization (and not mere regulation, which can address discrimination) is needed are in no way unique to insurance. You have continually failed to articulate ANY reason why insurance should be socialized while other service industries should not be.

 

[King of the Americas]

...

Guess what: your past driving record put you in a category. You are advocating treatment based on this category. You are, by your own definition, advocating discrimination.

...

No... YOUR driving record, is YOUR individual merit, by which YOU ALONE are judged.

That's the opposite of discrimination.

Do you really not understand the definition at hand here?

 

[Ziggurat]

No... YOUR driving record, is YOUR individual merit

No it isn't. It's a proxy, and an imperfect one at that. Just like everything else which correlates with risk.

by which YOU ALONE are judged.

Your own personal credit score is something you have more control over than your driving record, and if they use your personal credit score, then they are judging YOU ALONE just as much as when they judge based on driving record.

And it's not even YOU ALONE that they're judging. Rather, they lump everyone with equivalent driving records together into a group, assess the risk of the group, and then charge accordingly because of your membership in that group. The fact that you have the same number of accidents as someone else doesn't mean you're just as good a driver as them. You could be better than them just just have worse luck. So "individual merit" never actually enters the picture.

That's the opposite of discrimination.

No it isn't. It's merely discrimination that you approve of. There's nothing categorically wrong with that, we discriminate all the time, frequently with good reason.

Do you really not understand the definition at hand here?

Indeed, I do. You, however, do not understand the definition or what insurance companies actually do.

And you continue to avoid the question of why you want to socialize this particular service industry when nothing distinguishes it from other service industries.

 

[King of the Americas]

No it isn't. It's a proxy, and an imperfect one at that. Just like everything else which correlates with risk.



Your own personal credit score is something you have more control over than your driving record, and if they use your personal credit score, then they are judging YOU ALONE just as much as when they judge based on driving record.

And it's not even YOU ALONE that they're judging. Rather, they lump everyone with equivalent driving records together into a group, assess the risk of the group, and then charge accordingly because of your membership in that group. The fact that you have the same number of accidents as someone else doesn't mean you're just as good a driver as them. You could be better than them just just have worse luck. So "individual merit" never actually enters the picture.



No it isn't. It's merely discrimination that you approve of. There's nothing categorically wrong with that, we discriminate all the time, frequently with good reason.



Indeed, I do. You, however, do not understand the definition or what insurance companies actually do.

And you continue to avoid the question of why you want to socialize this particular service industry when nothing distinguishes it from other service industries.

First, I am NOT arguing, not could I argue for a government take of any other industry except the insurance one. That 'you' think I should is irrelevant.

Second, the current system is based on 'risk'. My public one would not be.

You are confusing issues I am afraid. Your credit score is based on YOUR personal history in the repayment of debt. So it isn't discrimination to base an interest rate on the borrower's personal merit.

Now, using that score, to extrapolate how ALL X-credit scorers will fare as claim makers IS discrimination because it isn't using that driver's individual merit, but rather a group with the same credit score in which to assign a premium rate.

I understand completely and fully how insurance companies operate at present. I am suggesting a very different model, based on different goals.

 

[Ziggurat]

Second, the current system is based on 'risk'. My public one would not be.

Well that's a bloody stupid idea. If you don't base it on risk, then you're being too risky.

You are confusing issues I am afraid. Your credit score is based on YOUR personal history in the repayment of debt. So it isn't discrimination to base an interest rate on the borrower's personal merit.

Now, using that score, to extrapolate how ALL X-credit scorers will fare as claim makers IS discrimination because it isn't using that driver's individual merit, but rather a group with the same credit score in which to assign a premium rate.

What complete and utter incoherence. You're claiming that your credit score is both completely personal, but at the same time it represents only some group aggregate. You're contradicting yourself, and you don't even realize it.

 

[King of the Americas]

Well that's a bloody stupid idea. If you don't base it on risk, then you're being too risky.



What complete and utter incoherence. You're claiming that your credit score is both completely personal, but at the same time it represents only some group aggregate. You're contradicting yourself, and you don't even realize it.

My model would punish those who've ACTUALLY caused accidents, and those who represent ACTUAL risks of making a claim.

YOU are one making contradictory statements.

'I' said a credit score is representative of YOUR ability to repay a debt, so it is based on YOUR individual merit, and thus it is NOT discrimination.

Using that score to place a 'group' of like scorers in the same category for DRIVING insurance risks IS discrimination, because you are identifying a group and NOT looking at individual's merit.

I've tried to explain this multiple times, I am not sure you are capable of grasping the concept of discrimination...

 

[Ziggurat]

My model would punish those who've ACTUALLY caused accidents

That's not the role of insurance.

and those who represent ACTUAL risks of making a claim.

Obviously not, since you want to eliminate all the ways that we can actually better estimate risk.

YOU are one making contradictory statements.

It's funny that you should say that, right after contradicting yourself.

'I' said a credit score is representative of YOUR ability to repay a debt

On what basis can you make this claim? Why, on the basis that, statistically speaking, people with low scores are at higher risk of defaulting.

That conclusion is based on the exact same actuarial analysis that leads to conclusions about driver risk based on age, etc.

so it is based on YOUR individual merit

No it isn't. You know almost nothing about me from my credit score, except that I am a member of a group of people with the same score.

Using that score to place a 'group' of like scorers in the same category for DRIVING insurance risks IS discrimination, because you are identifying a group and NOT looking at individual's merit.

How is a number discrimination in one case but not in another? In both cases, the different treatment is due to a statistically significant risk difference for populations segregated by score. You think there's a difference, but there isn't.

 

[King of the Americas]

That's not the role of insurance.

...


How is a number discrimination in one case but not in another? In both cases, the different treatment is due to a statistically significant risk difference for populations segregated by score. You think there's a difference, but there isn't.

The role of MY public mode would be simply to replace last year's losses in claims. My model would do this by charging those who've made actual claims 'more' than those with clean driving records.

One LAST time with discrimination:

A person's credit history is based on THAT person's individual merit with regards to 'repaying debt'.

A person's driving record is based on THAT person's individual merit with regards to 'operating a motor vehicle'.

Lumping a group of 750 credit scorers together to attempt to determine how they would fair as insurance claim makers IS 'discrimination' because you are NOT using each person within that group's individual merit in regards to DRIVING.

One score should NOT be used to group people together, in an attempt to say how they would perform in another unrelated area.

At this point, I am going to ask you to find someone else to describe or otherwise define "discrimination" to you, as I don't think I have the tools to break through your mental block.

 

[Ziggurat]

The role of MY public mode would be simply to replace last year's losses in claims.

What a stupid model. Especially given that you've already pointed to massive natural disasters as a problem for insurance. If you only charge based on what was actually claimed last year and not on risk, then you're screwing yourself over if claims jump this year for any reason. Really, why should rates vary from year to year based on something like the weather?

One LAST time with discrimination:

A person's credit history is based on THAT person's individual merit with regards to 'repaying debt'.

So we can add "credit scores" to the list of things you don't understand.

Your credit score is not simply based on your repayment history. Two people with perfect repayment histories (meaning they paid every debt on time) can still have very different credit scores. Other factors enter into it as well. You can call these factors "merit" if you want, but the only thing they actually are is statistics which are correlated with risk. The difference you imagine simply does not exist.

Furthermore, you continue to avoid the question of why socialization of insurance is justified when socialization of other industries is not. Your objection to discrimination is not a reason, since that can be handled through regulation without socialization. You have no answer to that, do you?

 

[King of the Americas]

Zig,

I can't help you...

 

[Ziggurat]

Zig,

I can't help you...

Indeed. You can't even help yourself.

 

[King of the Americas]

Indeed. You can't even help yourself.

I'm just fine, thanks.

 

[Francesca R]

Er, no. You have compounded your ignorance of insurance with the revelation that you simply do not know what discrimination is either. In this discussion, black is white to you. Ignorance is wisdom. Avoidance is argument. Woo is critical thought.

Way to go.

 

[King of the Americas]

Er, no. You have compounded your ignorance of insurance with the revelation that you simply do not know what discrimination is either. In this discussion, black is white to you. Ignorance is wisdom. Avoidance is argument. Woo is critical thought.

Way to go.

YOU disagree with the accepted definition of discrimination...?

Shocking!

 

[Neally]

My model would do this by charging those who've made actual claims 'more' than those with clean driving records.

You mean just like all private insurance companies do now? Sorry, but this model is nothing new. Insurance companies also add in all the other factors that have been found to correlate with accidents into their underwriting so that they don't wait until after the fact to figure out who should be charged more or less. Is it a perfect model? Of course not, neither is charging people more or less based on their driving record. There is no guarantee that the person that you raised their rates on due to a speeding or accident incident will repeat that in the future, thus you have discriminated (oh noes!) against him and overcharged him.

Lumping a group of 750 credit scorers together to attempt to determine how they would fair as insurance claim makers IS 'discrimination' because you are NOT using each person within that group's individual merit in regards to DRIVING.

It is discrimination, but not for the reason you give. If credit score has been statistically correlated to insurance claims, you look at each person's individual credit score and assess the insurance claim probability and set the premium appropriately. Perfectly rational, scientific and reasonable discrimination and pricing.

One score should NOT be used to group people together, in an attempt to say how they would perform in another unrelated area.

You need to learn about statistics, probability, correlation, and underwriting before make a claim that is clearly false.

At this point, I am going to ask you to find someone else to describe or otherwise define "discrimination" to you, as I don't think I have the tools to break through your mental block.

Not sure what your obsession with this word is. Regardless of the definition, how you sort out people to determine their insurance premium is based on statistically supported underwriting criteria is the issue. Your ultimate model of using their driving record is simply one other imperfect criteria that results in some people being charge more or less than they should, just like all the other criteria that is currently used which you have such a big problem with.

 

[King of the Americas]

...

Not sure what your obsession with this word is. Regardless of the definition, how you sort out people to determine their insurance premium is based on statistically supported underwriting criteria is the issue. Your ultimate model of using their driving record is simply one other imperfect criteria that results in some people being charge more or less than they should, just like all the other criteria that is currently used which you have such a big problem with.

My ultimate goal is to lower insurance premiums...

Have you read through this whole thread yet?

Discrimination is 'one' aspect of current system I want to 'fix'.

 

[Neally]

My ultimate goal is to lower insurance premiums...

Which can be summarized by basing premiums solely on driving record and having government administer it to avoid the profit element. Correct?

 

[King of the Americas]

Which can be summarized by basing premiums solely on driving record and having government administer it to avoid the profit element. Correct?

That's right, yes.

 

[Neally]

That's right, yes.

Okay, well first you have to demonstrate how just using the driving record alone has more accurate predictive capabilities than combining it with the other underwriting factors that are currently used. Clearly if that were the case, companies would not use the other factors. It is in their best interest to make the most accurate prediction as possible to project the future claims of anyone insured. The most accurate prediction will maximize their profit by making their premiums the most competitive and minimizing their losses. Therefore, it's pretty obvious that just using the driving record to set premiums will not reduce the cost of insurance.

As far as the profit element, we know for a fact from health insurance that non-profit providers do not have premiums that are significantly lower than for-profit companies. The industry as a whole operates on an average of less than 4% profit margin.

Allstate had a profit margin of 3% last year and Progressive Insurance had a 7.1%. So if you think a government owned insurance company can crush that obscene profit margin, you'll enjoy a whopping 3% - 7% decline in insurance premiums.

 

[King of the Americas]

...

Allstate had a profit margin of 3% last year and Progressive Insurance had a 7.1%. So if you think a government owned insurance company can crush that obscene profit margin, you'll enjoy a whopping 3% - 7% decline in insurance premiums.

That 'profit margin' comes ATOP spending that would not occur in a non-profit model.

In the study linked a page or two back, proposed that there was an almost 50% reduction in private vs public models in Canada.

Driving records are great indicators as to likely claims makers. That is why the insurance sector uses them. That they want MORE criteria in which to further discriminate isn't surprising either. My argument is that my driving record is 'directly' related to my ability to avoid or cause an accident. My credit history is directly related to my ability to repay a debt. Using one to indirectly correlate to the other is NOT using individual merit to decide an outcome, but rather a group's attributes.