New Risk Assessment Techniques a Must If Credit Scoring Bans Enacted

October 25, 2006

  • October 25, 2006 at 10:35 am
    David says:
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    Mr. Mosley presents an interesting viewpoint; the downfall of credit scoring is the public\’s fault. The public is wrong.

    There is a reason why insurers and \”credit scoring\” have a terrible reputation – there is no public trust. States are passing legislation to do away with the use of credit scoring for no reason what-so-ever? Hello, the legislation is there because the public has long complained about the misuse of their credit!

    Insurers got lazy, dropped insurance training programs, forgot underwriting, became \”bookies\” and when they chose to talk down to the public on credit scoring, their own problems became the public\’s fault.

    Mr. Mosley needs to become a member of the public.

  • October 25, 2006 at 4:38 am
    Rick says:
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    \”He explained that insurers would have a hard time finding an alternative to credit scoring that is as accurate a predictor of loss. However, in the instance that credit scoring does go away, insurers would need to make the best use of what they are able to use.\”

    Does this mean underwriters would once again have to look at location, vehicle use, mileage, driving record, loss history, age, gender, vehicle type/performance and repair costs instead of a slick \’score\’???

    The author of this article seems to imply that the only clear predictor of loss is whether a person pays their bills on time. I guess I thought credit scoring was to be used in adjunct with the other factors that focus on a specific risk\’s exposure to loss.

  • October 26, 2006 at 7:03 am
    Rocco says:
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    I bet you have no clue what an actuary is and that insurance use them. They no doubt use rating factors that make a statistical difference in loss ratio. Uneducated responses like this tell me how little you know about insurance or the actuarial process that goes into rating. I furthmore bet that you beleive that people who have bad credit happened by accident 100% of the cases. Unreasonable and uneducated liberals like yourself are liberal will never dominate America.

  • October 26, 2006 at 7:34 am
    sucker says:
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    Now Now Roco let\’s not place political affiliation with this issue because both parties/all parties are guilty there!
    That\’s one of the problems. Agreed on the louser couch potato but formulations are just that. The problem is the matrix they utilize to attain those formulations, em what do they call it profiling. They are geered specifically to hit the very people you mentioned. What does insurance premium have to do with a couch potato anyway. Anyone in insurance is over worked and under paid so your tears of hard work won\’t work here, again where is all the money going? That should be the question?
    I assure you that even the richest of the rich would sue if they had an opportunity. I believe that\’s what your saying correct? Irresponsible spending is a sad reality of todays people shame on the financial institutions for causing that.
    If you don\’t have money you\’ll sue and if you do have money you won\’t? Come on who are you trying to kid?

  • October 26, 2006 at 8:38 am
    Brent says:
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    Most of the public has never seen their credit report. However, those that monitor their credit report notice that it is inaccurate and extremely difficult to correct. In addition, their credit scores are impacted by items beyond their control. If the credit bureau\’s were more dilligent about ensuring accurate information the public would be more receptive to the use of credit reports.

  • October 26, 2006 at 2:00 am
    Sandi says:
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    I\’m with Brent, David and Rick – get a clue insurance companies. How did they actually write insurance for all those years with good old fashioned underwrtiting considering the exposures and experience and still stay in business? They are also right in that the credit reports I have seen are generally WRONG and are impossible to get corrected. I\’m an agent, but I too would \”vote no\” for credit scoring.

  • October 26, 2006 at 2:24 am
    LLCJ says:
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    When actuaries say that CS is an accurate predictor of loss, please understand it means claim payout.

    In terms of statistical significance, the credit score is an extremely significant predictor of loss. Note, I didn\’t say good or bad drivng. I said loss. It may not be explainable by intuition, but it is undeniable mathematical fact.

    The claim that credit scores are inaccurate is false. The opponents of CS are always trumping this anecdote or that anecdote talking about so and so who had high medical bills, etc. But these stories are in the smallest minority.

    All of you who speak on this subject, please try to read up on actuarial science and the statistical tools of correlation before making anecdotal comments on this issue.

  • October 26, 2006 at 2:33 am
    Sandra Taylor says:
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    No anecdotes – not arguing the credit reports may be a predictor of loss – if accurate. I have some that have the exact same debt on them twice, some that have other people\’s debt on them and some from different companies that have different things on them. I\’m not anti-Darwin, just anti-big-brother and anti-incorrect \”facts\”. Now back to the anecdotes – no lie, I think real live underwriters are a good thing.

  • October 26, 2006 at 2:44 am
    LLCJ says:
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    I agree with you about one thing…credit score should not be the \”deal-killer\” in the acceptance/denial of an insurance contract. That, I agree, should be done by brokers/agents/underwriters. Absolutely.

    However, credit score is an invaluable tool in premium rating (i.e. price), both in the discounts people get for having good credit, and the surcharges people get for having bad credit.

  • October 26, 2006 at 2:44 am
    Jorge says:
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    I agree that credit scroring should not be used at all. I am an Agent and have gone over the issue with Underwriters stating that credit scoring has nothing to do with the underwriting process. The public is correct on voting against.



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