Monday, February 28, 2011

This sort of thinking leads to financial crises

The European Court of Justice is about to decide whether British insurance firms will be allowed to offer policies with lower premiums to young women or whether it can be said to infringe that magical concept, equality. This is what happens when business is controlled by people who do not have the faintest concept of basic economics and have never had to deal with any kind of financial issues.

There is a reason why young women get car insurance at more advantageous terms than young men: they are less likely to have major accidents, being more careful and less harum-scarum drivers. D'uh!

While equality is something we must all espouse when it comes to, for example, equality before the law (a concept that seems to be under pressure, as I hope to show in another blog), there is no equality as far as financial or actuarial risk is concerned. None. Insurance companies calculate quite carefully (though, undoubtedly, they sometimes get it wrong) what any individual's risk value is. It is not something that can be decided by notions of gender equality.

Then again, how different is this from our politicians demanding that banks lend money to small businesses regardless of whether they are a good risk or not? Or same politicians planning to set up a bank, using seized property and taxpayer backing in order to lend money to politically approved businesses regardless of their fiscal worth? Or, infamously, mortgage lenders being forced not to "discriminate" against certain applicants for mortgages on the grounds of them never being able to pay back what they borrow?


  1. I'm not sure I actually agree with you here, though I am normally against government intervention in principle. Hypothetically it is possible for insurance companies to analyse an individuals DNA to judge their risk of a range of diseases and to use that to set health insurance rates. Yet I don't think most people would regard that as fair as it would be completely outside of the control of the individual. Even someone who is cautious and abstemious and tries to maximize their probability of a long and healthy life could find themselves paying more than average due to a poor genetic inheritance. Surely the principle should be that insurance companies should judge risk on the record of an individuals behavior, rather than their genetics? Or to put it another way, why should the most dangerous and reckless young female drivers (and there are always outliers) pay less than the most cautious and careful young male drivers?

  2. I think the point is that these unelected fuckwits are interfering in something which works perfectly well and they are going to make it worse.

    There is not actually a problem at the moment so why create one?

    It would be deeply unsatisfactory if such a judgement came from Westminster but at least THEY are OUR fuckwits.

    The EU are even more unelected and even more fuckwitted. Hence the emotion.

  3. How many of these parasites in responsible positions have ever done anything useful for society,or put differently, have worked in the private sector? Things could be improved if our top "civil servants" were required to have experience in doing something the public found useful. Useful- a product or service people pay for out of their own pocket, without compulsion.

  4. Some of the EU fuckwits are ours, I am sorry to say.