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Word of the Week · Issue 006 · Week of 17 August 2026

PREDICTIVE

What it claims
A neutral measure of risk. It predicts claims accurately within every group as well as across them, and accurate prediction is what fair pricing is.
What it does
Congress ordered the government to find out whether credit scoring charges Black drivers more. It found out. It printed the number. Then it printed a word, and the word held.
The receipt
A prediction that cannot say why it predicts is not a finding. It is a pattern wearing a badge.
A close view of "Man Controlling Trade," the marble sculpture by Michael Lantz outside the Federal Trade Commission's Apex Building: a straining man gripping the bridle of a rearing horse.
"Man Controlling Trade," Michael Lantz, 1942, Federal Trade Commission headquarters, Washington, D.C. Photo: David (Flickr), public domain.

Congress asked two questions in 2003. What does credit scoring cost Black drivers, and could the same result be had with less harm. The Federal Trade Commission answered both, in 2007, in public.

Turn the scoring on and average predicted risk for African Americans rises ten percent. For white drivers it falls. More than half of all African Americans hold scores in the lowest quarter. Then the Commission printed one sentence more, third in its own conclusion: it has not been clearly established why scores are predictive of risk.

The number correlates. Nobody knows what it measures. You still cannot legally drive in most of this country without insurance, and its price is still set, in part, by that.

Docket

Federal Trade Commission, 'Credit-Based Insurance Scores: Impacts on Consumers of Automobile Insurance,' Report to Congress, July 2007, 242 pp. Mandated by Section 215 of the FACT Act of 2003. Contains the measured racial effect, the proxy analysis, the race-neutral model results, and the sentence conceding the mechanism is unexplained.

Read the file PREDICTIVE WR-FCT-019
On the wire