According to the insurance industry credit scoring is a nondiscriminatory, balanced, accurate predictor of future potential losses and without this valuable tool most citizens will lose current discounts and be subjected to higher rates. Without a doubt, they tell the truth. This industry, the same industry which has been found guilty of discriminatory racial redlining in the past, selling life insurance to blacks at a higher rate than whites, denying claims and failing to honor contracts in California after the earthquake, bilking consumers out of hundreds of millions of dollars through the misrepresentation of life and financial products and threatening agents should they speak out at public hearings in defense of consumers.
The main question that needs to be addressed is a simple one. Is this policy in the best interest of the public or does it have the potential of violating the public trust?
If answered honestly, the answer is simple. Credit scoring should not be allowed.
Credit scoring is discrimination, sure. So is rating based upon age, sex, health, driving record, age of you home, fire protection of you home, want to go on? Duh! That’s how risk is spread on a fair basis.
Without spreading risk on a fair basis, we have social insurance, and with social insurance, we have no incentives to be lower risk clients, competition goes away, risk increases, and the system falls apart. So, right, let’s get rid of credit scoring
Ok, now let’s get rid of age rating, motor vehicle record use, value and type of car, age of home, prior loss history, fire protection, etc and just make everyone pay the same rate.
Let’s get rid of private insurers in a competative environment who have a financial incentive to deliver a better product at a lower cost than their neighbor.
Let’s just set up a giant federal insurance institution to collect premiums like the IRS and distribute claim payments like Medicare. That’ll fix this nasty discrimination huh!
Look folks, just because you don’t understand it, or have a hard time believing it, doesn’t make it wrong. Why don’t you read the independent study of 2,500,000 insured vehicles nationwide showing certain principles of credit use also have higher or lower loss history. This is fact, and is outside race, religion, creed, nationality, location, etc. It’s all how responsible you are in your use of credit. No, it’s not the only tool. No it is not a final indicator of who will have a loss and who will not, neither are other rating factors. It’s just another tool along with the other tools insurance companies have come up with over the ages to indicate degree of risk. That’s what the indistry does best.
It had to happen. Credit Scoring is WRONG and does exactly what this lawsuit says it does. I have experienced too much of this in my own agency. It affects my lower income clients more than any other class. The worst effect is that the least able to pay higher premiums for homeowers and auto insurance are forced to do just that or drop their insurance altogether.
The problem is that there have been no TRUE INDEPENDENT studies. All studies have either been industry initiated or industry funded. The studies performed by the States of Maryland, Michigan, Missourri, Washington and Alaska lend creedence to the perception that discriminatory practices may well exist.
credit scoring is a tool to further segregate the quality of risk.Restricting the use of this tool will flatten rates..meaning bad risks will pay less but better risks will pay more..Over regulation of business by Socialistic groups that look at Insurance companies as Utilities that simply pass out the money when people make mistakes…Insurance companies will figure out a way to avoid the poor risks..unfortunately if the use of credit scoring is disallowed then many good risks may go without insurance also…beware of Overregulation by Pedagogal politicians who dont understand risk and reward!!!!
The use of credit scoring is nothing more than a tool for the Insurers to charge higher premiums. As I look at my standard companies today, they are all using county mutual paper for their auto programs and lloyds paper for the property.Whoever heard of having 15 pricing tiers in auto and 4 or more in property. Let’s face facts every company says the first thing you look at is the score. There was a time when in auto we looked at drivers, driving records and vehicles, property we looked at location,construction and other important underwriting information. As an Independent Agent I spend alot of time scoring clients with various companies all coming back at different levels. That is if they make it past the first score report. Companies do not underwrite any more they feed the data into their rating systems and we enter our data and pop goes the weasel.The insurance industry GIANTS are not going to police themselves. Do you remeber when the first companies started using credit? It didn’t take long for all of them to jump on the band wagon with $ signs in their eyes. THIS WAS NOT PUT IN PLACE TO GIVE INSURED’S PREMIUM BREAKS FOR GOOD CREDIT. I wish I had a list of all the potential customers that have come into my office after justing buying new vehicles or a new home, clean driving records, no claims and could not qualify for good rates. I personally hope a Federal Law is imposed against the use of credit by the insurance industry. The States haven’t been able to stand up against the pressure from the Insurance Industry Lobbyists when credit scorring is on the agenda.
– I have been in the insurance industry for 35 years as an agent, risk manager and claimsman and credit scoring is inaccurate and emblematic of the property and casualty insurance industry’s efforts to take another incomplete shortcut at the expense of the public. Yes, a choosen few in the public may benefit from this flawed approach, however for the most part this is also an unjust enrichment scheme by the industry.
– Aside from the hidden minority agenda in this incomplete effort to rate a risk, ask anyone who has been the victim of indentity theft and/or had false information impossible to remove from their credit report.
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According to the insurance industry credit scoring is a nondiscriminatory, balanced, accurate predictor of future potential losses and without this valuable tool most citizens will lose current discounts and be subjected to higher rates. Without a doubt, they tell the truth. This industry, the same industry which has been found guilty of discriminatory racial redlining in the past, selling life insurance to blacks at a higher rate than whites, denying claims and failing to honor contracts in California after the earthquake, bilking consumers out of hundreds of millions of dollars through the misrepresentation of life and financial products and threatening agents should they speak out at public hearings in defense of consumers.
The main question that needs to be addressed is a simple one. Is this policy in the best interest of the public or does it have the potential of violating the public trust?
If answered honestly, the answer is simple. Credit scoring should not be allowed.
Credit scoring is discrimination, sure. So is rating based upon age, sex, health, driving record, age of you home, fire protection of you home, want to go on? Duh! That’s how risk is spread on a fair basis.
Without spreading risk on a fair basis, we have social insurance, and with social insurance, we have no incentives to be lower risk clients, competition goes away, risk increases, and the system falls apart. So, right, let’s get rid of credit scoring
Ok, now let’s get rid of age rating, motor vehicle record use, value and type of car, age of home, prior loss history, fire protection, etc and just make everyone pay the same rate.
Let’s get rid of private insurers in a competative environment who have a financial incentive to deliver a better product at a lower cost than their neighbor.
Let’s just set up a giant federal insurance institution to collect premiums like the IRS and distribute claim payments like Medicare. That’ll fix this nasty discrimination huh!
Look folks, just because you don’t understand it, or have a hard time believing it, doesn’t make it wrong. Why don’t you read the independent study of 2,500,000 insured vehicles nationwide showing certain principles of credit use also have higher or lower loss history. This is fact, and is outside race, religion, creed, nationality, location, etc. It’s all how responsible you are in your use of credit. No, it’s not the only tool. No it is not a final indicator of who will have a loss and who will not, neither are other rating factors. It’s just another tool along with the other tools insurance companies have come up with over the ages to indicate degree of risk. That’s what the indistry does best.
Well stated JB.
It had to happen. Credit Scoring is WRONG and does exactly what this lawsuit says it does. I have experienced too much of this in my own agency. It affects my lower income clients more than any other class. The worst effect is that the least able to pay higher premiums for homeowers and auto insurance are forced to do just that or drop their insurance altogether.
When will we learn?
The problem is that there have been no TRUE INDEPENDENT studies. All studies have either been industry initiated or industry funded. The studies performed by the States of Maryland, Michigan, Missourri, Washington and Alaska lend creedence to the perception that discriminatory practices may well exist.
credit scoring is a tool to further segregate the quality of risk.Restricting the use of this tool will flatten rates..meaning bad risks will pay less but better risks will pay more..Over regulation of business by Socialistic groups that look at Insurance companies as Utilities that simply pass out the money when people make mistakes…Insurance companies will figure out a way to avoid the poor risks..unfortunately if the use of credit scoring is disallowed then many good risks may go without insurance also…beware of Overregulation by Pedagogal politicians who dont understand risk and reward!!!!
Discrimination, pure and simple. Allstate’s position that said practice benefits every policyholder is absurd.
The use of credit scoring is nothing more than a tool for the Insurers to charge higher premiums. As I look at my standard companies today, they are all using county mutual paper for their auto programs and lloyds paper for the property.Whoever heard of having 15 pricing tiers in auto and 4 or more in property. Let’s face facts every company says the first thing you look at is the score. There was a time when in auto we looked at drivers, driving records and vehicles, property we looked at location,construction and other important underwriting information. As an Independent Agent I spend alot of time scoring clients with various companies all coming back at different levels. That is if they make it past the first score report. Companies do not underwrite any more they feed the data into their rating systems and we enter our data and pop goes the weasel.The insurance industry GIANTS are not going to police themselves. Do you remeber when the first companies started using credit? It didn’t take long for all of them to jump on the band wagon with $ signs in their eyes. THIS WAS NOT PUT IN PLACE TO GIVE INSURED’S PREMIUM BREAKS FOR GOOD CREDIT. I wish I had a list of all the potential customers that have come into my office after justing buying new vehicles or a new home, clean driving records, no claims and could not qualify for good rates. I personally hope a Federal Law is imposed against the use of credit by the insurance industry. The States haven’t been able to stand up against the pressure from the Insurance Industry Lobbyists when credit scorring is on the agenda.
– I have been in the insurance industry for 35 years as an agent, risk manager and claimsman and credit scoring is inaccurate and emblematic of the property and casualty insurance industry’s efforts to take another incomplete shortcut at the expense of the public. Yes, a choosen few in the public may benefit from this flawed approach, however for the most part this is also an unjust enrichment scheme by the industry.
– Aside from the hidden minority agenda in this incomplete effort to rate a risk, ask anyone who has been the victim of indentity theft and/or had false information impossible to remove from their credit report.