Weapons of Math Destruction — Chapter 9

In this chapter, Cathy O’Neil discusses the effects that WMDs play on the insurance industry. I think the biggest thing that I found odd was the effect that a credit score had on your insurance prices. In her book she shows an example of this in the real world: “In New York State, for example, a dip in a driver’s credit rating from ‘excellent’ to merely good could jack up the annual cost of insurance by $255.” This may not sound like a huge number when you look at the monthly increase, only $21.25 which is less than most people spend on coffee a month. The issue here is that it’s based on credit score. How does credit affect how good of a driver you are? I can understand the concept, a person who has good credit is more likely a person to play the game of life conservatives with little risks. But does someone with a better credit score really that less likely to have an issue where they need to involve insurance?

While reading this I thought that maybe this was a small factor and other things had a bigger effect such as your driving record. I was quickly corrected in my thinking by O’Neil, “In Florida, adults with clean driving records and poor credit score paid an average of $1,552 more than the same drivers with excellent credit scores and a drunk driving conviction.” After reading this I was floored. I really thought long and hard about this questioning how someone with a bad credit score is more likely to utilize their insurance over someone who is a convicted drunk driver, and I really can’t seem to justify it. It really does just seem unfair to those with bad credit. What really bothered me was these people with bad credit are likely not in the best financial situations, hence the bad credit, but these are the people who are having to generally pay more for their insurance. Why?

Another thing that I feel is missed by these WMDs is why this person has bad credit, I feel it’s quite often that people with bad credit aren’t there for dumb mistakes. For example, someone who took out too much in student loans and wasn’t able to find a job after graduation. Not repaying their loans would ruin their credit score, but I don’t see how not repaying their loans would affect their driving. In conclusion, the system seems terribly flawed and there has to be a better way.