Wednesday, June 2, 2010


Insurance companies can drop people or refuse to cover people or charge higher premiums for all sorts of reasons that those people may perceive as arbitrary. The classic example is that males under the age of about 25 are charged higher premiums for auto insurance. I've talked to a lot of people who think that is entirely unfair. Most of them males under the age of 25. They swear that they're not getting in any accidents and they know, they absolutely know, that girls get in more accidents than boys do. So what gives?

"Fair" actually has very little to do with it. And your anecdotal experience is totally irrelevant. Even if it's true that girls get in more accidents than boys . . . I mean, I don't know whether or not it is . . . but even if it is true, all the insurance company cares about is that boys cost them more money than girls. For whatever reason. Maybe boys drive faster, which in turn means the "few" accidents they get into are more severe. And funerals, or extended hospital stays, are significantly more expensive than fender benders. The "why" is something insurance companies look at and can tailor specific plans' rates around related factors like number of speeding tickets. However, the general principal is that when they set rates, it has less to do with you specifically than it does with risk factors associated with your subset of the population.

We're human beings, though. Knowing what insurance companies are doing doesn't necessarily change how we feel about it. I understand that. When Acuity began using credit profiling to influence premiums, that didn't really feel fair. It felt like they were denying insurance to the population that would need it the most in a crisis. The company leadership explained it to employees very well. Explained that there were some very careful studies done to verify that there is no correlation between credit score and socio economic status. They weren't discriminating against the poor. Credit score varies virtually identically regardless of if you're rich or poor. It's just that low credit score correlated significantly with higher insurance risk. They don't really know why and other than making sure they aren't breaking any discrimination laws, they don't care.

The one that still gets me in that irrational, "hey not fair!" part of my brain is denying home coverage to people with certain types of dogs. Not just the stereotypical "bad" dogs, like Pit Bulls or Rottweilers, either. Acuity would flat out turn down coverage if you had a Siberian Husky or German Shephard. Even with no "incident" to prompt a risk assessment. The dogs I would want if we could get one were on the list. My parents couldn't get coverage with Acuity.

But "fair" actually has very little to do with it, right? It's just the risk levels the company leadership sets as acceptable and the rest is math.

So anyway. My brother-in-law, Mike, knows someone whose insurance policy was recently dropped by Acuity. I guess that individual empathizes with my employment being "dropped" by Acuity. He, in turn, knows a recruiter in Milwaukee that sometimes looks for mainframe programmers. He passed her name on to Mike who passed it on to me and I'll be contacting her today.

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