The insurance business is populated with some very bright andarticulate people who have an amazing ability to contest any pointwith reasonable analysis and shrewd debate. So it is a bitbefuddling to see the industry so tone deaf on one particularchallenge. The issue was a recent article in Consumer Reports thattook the industry to task for its use of consumer credit scoringwhen underwriting auto policies.

In its piece, the magazine said it obtained the underwritingformulas of a number of insurers and hired actuaries to run thenumbers using hypothetical credit scores in best- and worst-casescenarios. The results, from a consumer's perspective, were ratheralarming. Using the actuarial formulas of three insurers forcalculating a policyholder's auto premium, the test revealeddramatic differences in pricing.

Apparently this is not the first time the magazine has attemptedto examine the use of credit scoring in insurance. The magazine'seditors said that for years they attempted to obtain informationdirectly from insurers to make such a determination, but failed.Insurers argued that such information remains proprietary and thatsecrecy maintains their competitive edge.