| Subject: Rethinking the disparity between the rich and the poor |
Author:
Carrie
|
[
Next Thread |
Previous Thread |
Next Message |
Previous Message
]
Date Posted: 10/30/06 10:50am
In reply to:
Nora
's message, "Measure 42 Just posted to Lars Larson since they wouldn't let me talk live" on 10/ 6/06 4:14pm
The insurance lobbyists' efforts to spin the issue, puting forth that people with lower credit score are more likely to perform at risk behavior resulting in higher claims, is something that should be countered with the truth by our news agencies. It is a fact that poor people use their insurance for the purpose in which it was purchased. For this reason the insurance companies want to know if you are poor and more likely to use the insurance or if you are more economically stable and likely to bite the claim and pay for damages yourself. There is no correlation, according to traffic accident reports and home incident reports (fire, hospital reports, etc.) to correlate that people with poor credit are involved in more incidents (so called risk behavior) than people with good credit. However, statistics indicate that people with good credit will bite the costs for such incidents themselves rather than put these claims through their insurance companies while poorer people do not have the resources to do so. So, insurance companies' ads more accurately should be, "we want to know if your poor enough to actually have to use the insurance we are selling you or rich enough that you only have insurance because we lobbied to make it required to be carried but you pay out of pocket for any damages so your premiums won't go up! Hey, its our business, we should be able to charge what we want based on whatever faulty information system we choose." The credit system is already woefully inadequate in accurately portraying an individual's credit history with a plentitude of examples of refusing to correct credit information or update it in a timely fashion. The passage of this measure will prevent the insurance companies from punishing the poor for using their insurance NOT punish the rich for not using it (as the current ads imply). In support of this argument Consumer Reports agrees that the reason that insurance companies use credit reports in the first place is because the very people who use their insurance for the reason the insurance was purchased can be punished for doing so. “The correlation with fraud is striking,” says Gordon Stewart, president of the Insurance Information Institute. But the Monaghan study, which reviewed those long-standing inferences, says that links between responsible financial management and future expected losses are “unsupported.” Steven Parton, general counsel for the Florida Office of Insurance Regulation, says, “What they’re really looking to see with insurance scores is who is most likely to file a claim, not who will most likely have an accident. If I have the money, I won’t file a claim, because my rates will go up. People of low economic status don’t have that luxury.” Parton adds, “Insurance companies are looking at whether they’re relying on their insurance in case they have an accident, which is what they’re buying insurance for to begin with.”
Reference Consumer Reports article: Caution! The secret score behind your auto insurance
http://www.consumerreports.org/cro/personal-finance/car-insurance-8-06/overview/0608_car-insurance_ov.htm
[
Next Thread |
Previous Thread |
Next Message |
Previous Message
]
| |
Feedback: 