[Grovenet] Answer on 42.

Wed Oct 25 08:37:57 PDT 2006

No. Rules that are self-defeating to our society for some reason. For
example, double hulled tankers for oil carriers. They are required for
everyone for the benefit of all. If one carrier tried to use them while
others could float any old hull that was available, that company would be at
a huge disadvantage. 

But, by having laws that require that *every* carrier meet certain
standards, the world is made safer from spills while the various companies
still have a "level playing field" on which to compete. They are free to
figure out the most economical way to move their oil to market within the
rules. 

Businesses are not allowed to discriminate based on religion or ethnic
group. It's been a LOT of years since I've seen a sign on a shop door that
says "NO COLORED" or "NO JEWS". 

Sure, it's possible that some bigoted folks are looking at ways to keep
certain groups out of their business simply because they don't like the
shape of their eyes, the color of their skin or where they worship. That's
why there are so many "watchdog" groups constantly asking whether what a
business is doing is legitimately targeting its intended customer base or
whether it's trying to discriminate against a particular group based on
disallowed criteria such a race, etc. 

That points to a huge challenge we must meet if our style of capitalism is
going to work: choosing and enforcing the rules we do adopt while keeping
them to a bare minimum to avoid killing off the businesses that form the
backbone of our society. We haven't been doing so well at it for the last
half century. That's why almost everything we buy comes from other countries
now. 

Ron D'Eau Claire 

-----Original Message-----
From: grovenet-bounces at rdrop.com [mailto:grovenet-bounces at rdrop.com] On
Behalf Of Dale Wiley
Sent: Wednesday, October 25, 2006 7:32 AM
To: 'Forest Grove local interests list'
Subject: Re: [Grovenet] Answer on 42.

Huh ???? Rules to prevent business's from being self defeating ?? I guess I
need to understand what you mean by self defeating....

excluding or penalizing certain ethnic or economic groups ?? Happens every
day in business.. choices by every business based upon decision based on
data....

We need to step in with rules any time the drive for more customers and
better profits causes any business to make choices that are self-defeating
over time or which do something else we consider unacceptable in our
society, including excluding or penalizing certain ethnic or economic
groups. I don't see any evidence of that happening here.

Ron D'Eau Claire

-----Original Message-----
From: grovenet-bounces at rdrop.com [mailto:grovenet-bounces at rdrop.com] On
Behalf Of allnutt
Sent: Tuesday, October 24, 2006 5:22 PM
To: Forest Grove local interests list
Subject: [Grovenet] Answer on 42.

I guess I have to say thanks to Jeff for making me think about measure 42.
It prompted me to ask around and I think I found a person who actually has
good information.  He has worked  on consumer advocacy issues and knows a
lot about the history of this and how it came  to be an initiative.

Remember that it is already on the books that insurance companies can't
raise your rates or drop your coverage base on a change in your credit
report.  When that was originally going through the legislature it actually
included the ban on using credit ratings as part of the initial rate setting
process.  The bill had quite a bit of bipartisan support and passed one of
the chambers down in Salem but got stalled in the other.  The compromise
process wound up getting the bill passed by removing the part dealing with
setting initial rates. That relieves my worry that 42 was written with a
Sizemore crayon.  It has had more evaluation and thought behind it than
Sizemore's typical measures so it carries very little risk of those pesky
unintended consequences.

And the evidence during the initial hearings for the bill had quite a bit of
testimony concerning the statistics of whether poor credit is an accurate
predictor of risk.  There is an element of correlation but not much support
for any cause and effect.  And on top of that, other factors that also have
a high correlation with credit ratings are already used in the formulas that
sets initial insurance rates.  (Example; Age is also a factor in setting
rates, but it correlates with credit rating too.  People's credit rating
tends to get better as they get older, get jobs, get better jobs, etc.  And
there are others too.)  So by using straight credit ratings to set how much
you pay, the effect is to multiply the number of times it is counted.

Insurance only works when the pools are big enough to spread out real risk.
By using credit risk multiple times and straight up, it winds up being a
powerful tool to be discriminatory and to cherry pick the best customers and
leave the remaining worthy but poorer insurance seekers in a bind.  Since
insurance is required by law, for automobile drivers at least, this gives
some balance to the little guys to counter act the fact that everyone is
required to buy it and helps even the playing field.

So, the bottom line for me is: Insurance companies already are using data
that is correlated to credit rating to set your rates, this measure doesn't
have the risks of most initiatives for poor writing, and it is essentially
fair.  So thanks Jeff for bringing it up.  I was undecided before but now I
support it.

Of course he explaine it much better than I did and I am trying to summarize
here but if you need to know more contact me off list.

Katie
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