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logical fallacies
can make applying
for car insurance
a discordant
experience.
630
Notes on
By Gwendolyn Anderson
prelude—Con Brio
“I’ve never had an accident driving my piano,” I told my insurance agent.
“How could my auto rates double?!”
An impending financial crunch hovered over me, to the tune of seven
Ben Franklins a year that I’d not budgeted into the long-planned purchase
of my treasured grand piano: like a C note at every octave. And I was being
asked to pay this … on my car?
“Your insurer now uses credit to set rates,” my agent answered flatly. I
wondered why I had expected him to sympathize, or to laugh.
“That makes no sense!” I protested. “I have excellent credit. I should
get a discount, like the good-student discount I got when I studied music
in college. Playing an instrument improves my focus, which makes me a
better driver.”
“It says right here, too many loans,” my agent replied, flatter than be-
fore. “That is,” he corrected himself, “more loans than optimal.”
“The piano showroom offered a short-term interest-free loan that I closed
once I found a fixed-rate home-equity line,” I said. “And I swear I’ve never
driven the Schimmel out of the living room. I take the Honda every day.”
“Closed loans count, too,” he sharply replied.
It was no use.
first Movement—
Adagio con Moto
The next morning I drove to work, still
unsatisfied with my agent’s explanation. I
took my car, of course, to avoid marring my
grand piano’s shiny finish with gravel and
road dust.
That new piano was the most valuable
object I’d ever owned. Funny thing, my homeowners’ insurance wasn’t increasing one
cent. (That insurance company uses a different model, and it had confirmed that my
contents coverage limit was already more
than adequate.) I parked in a space suitable
for an upright piano and walked into my
office at the North Carolina Department of
michael glen WooD
Insurance. It was 2004, and I’d just been
assigned to review confidential proprietary
insurance credit-scoring models.
The insurance industry, like others,
thrives on innovation. Advancements in
technology and informational databases spur the possibilities of competitive
advantage. Some innovative ideas fare
better than others. When hurricane rating analyses were first expanded from
five to a full 30 years of storm experience,
the technique was applauded as a vast
improvement, which it was. No second
thoughts arose until Hurricane Andrew
washed some insurers straight out of business. With more powerful computers and
