Thank you so much for your reasoned responses. I\’m relatively new to the game and I\’m sure I\’ll have clients asking me about this, so I\’m grateful for something besides \”Allstate is run by the Klan!!!\” to give them.
Thanks all, and good luck.
My experience is as an insurance agent in MA for 25 years. Last year our primary carrier started using credit scores. The first 5 clients we put into the system came back as unacceptable. Three of them had been long time, claim free policyholders (6+ years)with the same carrier now rejecting them. Each had purchased a new home and wanted to purchase insurance from their existing company. When I complained to the marketing rep… voila.. a new (Choicepoint)system was implemented and suddenly one of the companies in their group because acceptable for the same people who had been denied; unfortunately we lost several of them due to the distasteful experience with the carrier. I don\’t agree with credit scoring as I also feel the agent has a better perspective on their client…resulting in 5 figure contingency check! That is why we are called Professional Insurance Agents…we are professional! Happy New Year to all!
QUOTE: \”It is more likely that a person with bad credit will cost the insurer money. It\’s actuarial statistical fact.\”
I am not saying this is true or not true. If it is true, why haven\’t figures been realeased to show this? Why haven\’t the companies or the regulators or anyone else released the studies with the hard numbers?
Does this even exist? If so, please tell me where to access this information.
1. Credit algorithms are not secret in some states such as Texas. I myself have copies of TransUnion, Choicepoint, Progressive, etc algorithms obtained from the TDI.
2. Using credit for underwriting alone relegates poor scoring folks to non-standard carriers. Allowing credit to be used for rating, allows standard carriers to write high risks.
3. Credit scoring works. I know one company that reduced its fire claims 60% in a year by implementing credit underwriting/rating! The head of the company personally told me this.
4. The issue here is not whether credit works, but that companies using credit are alleged not to have followed the rules!
As an insurance agent in the State of NY for over 30 years, the use of credit score, or insurance score as the insurance companies would like us to name it, is an insult to any intelligent human being. Anyone who agrees with it use only see it from a selfish prespective and that\’s usually the insurance company. There is no correlation between a credit score and driving. There is no correlation between credit scores and owning a house. This is just a way for the insurance comapnies to charge more based on a tool call \”segmentation\”. Instead of one table rate, segmentation delivers many and it is driven by credit and other factors. There are no hard evidence to support it but the insurance companies are doing their best to make our politicans believe it is true. Only the smart politicans, like the new Governor-elect of the State of New York, Elliot Spitzer, will recognize it for what it is. It is a system of greed based on contrived data to drive the product up for people who don\’t always pay on time. The system is discriminating against low income people which are usually minorities. I see it everyday and it is a crying shame that for people who can earn big money, they are the ones who usually pay more. The use of credit score should be ban throughout the entire 50 States because it also drive Identity Theft. The hackers are getting right into the companies that supply the \”insurance scores\” and now the consumer is victimized once again. That is the only correlation that credit scores provide, possible theft of your social security number and all your other personal data. So let your State Senator know that you object to it and maybe there will be more than 13 States seeking a ban on its use.
The real topic for the insurance industry is demonstrating the complex metrics of the \”insurance score\” of which credit is only one of many complex factors. Since the introduction of insurance scoring and predictive credit modeling in Connecticut, we have seen incredible decreases in the vas majority of our client\’s premiums being paid for auto and homeowner\’s insurance.
At the very same time, insurance companies have begun offering more choice and broader markets for more difficult risks. The Connecticut Assigned Risk plan is at an all time low participation rate, (based on the last posted numbers) indicating that the voluntary market is working extremely efficiently to provide affordable insurance to the marketplace.
Enough is enough. State regulated insurance with rates based on historical risk factors that are directly related to the insured risk. Only allow a 10% max profit to those underwriting / administering the program. Thus, no more profit motive, no more need to look for biased ways to redline and make irrationally exhuberant profits. JUSTICE FOR ALL – REASONABLE PREMIUMS FOR ALL.
That is our experience. Aisus.com builds online rating for insurance companies. We have seen companies \’open\’ up to more difficult risks using our technology to rate/underwrite online with scoring.
When I hear agents complaining about scoring, I believe they don\’t know their own markets. Captive and leading independent carriers like Progressive are taking better risks out of the independent agency. The business walking into the independent agency is of higher risk on average than 5-10 years ago because of this. The companies we represent have noticed a decline in \’good\’ scoring new business as that business migrates. More and more business is business that has had rates significantly increased or dropped due to scoring with captive companies.
Scoring is good for independent agents because the companies they write for will be able to implement the same policies as State Farm, Progressive, etc making them competitive.
First and foremost, there is no such thing as walk-in business. The professional independent recieves over 90% of their business by referral. Your numbers are significant because the independent agency today is burning and churning for survival. The older established agancies are still field underwriting new business at a high profit rate of return. Statistics are good tools, however, it takes knowlege and experience to understand how the results were actually derived. Progressive has taken a huge market share, however, in the next five years the multi-line carriers will take back those lost policies where multi-policy discounts will beat their mono-line rate. Further more, Progressive has always cut the agents commissions so the independent agent will be glad to rewrite Progressive autos along with their homes, and umbrella\’s. Only time will tell.
You want me to pay higher premiums so that folks that make poor decisions can get insurance cheaper???
This is what insurance is about, measuring risk and insuring it as accurately as possible, and that is why companies like Progressive are winners in this game. They are a whole level above any other player in the game when it comes to know and pricing auto risks.
Tell me truthfully, should you pay the same rate as a driver with a CNI and a couple of DWIs, and three AFAs? Should you pay the same rate as a homeowner with two complete fire losses, multiple minor non-wind claims, on the coast, and in a flood zone? If you say yes, then I can only say that you are not responding to logical arguments.
Governments and courts decide what are \”fair\” risk criteria. Any company that does not use these criteria to the fullest extent of the law is endangering the company.
What you are proposing is that we get rid of insurance agents and companies and all submit to a government pool so that we get the same rate for insurance….I think thats called communism or some kind of ism, but not America. This is a land of choices and repercussions and insurance rates are a free market form of repercussion.
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Thank you so much for your reasoned responses. I\’m relatively new to the game and I\’m sure I\’ll have clients asking me about this, so I\’m grateful for something besides \”Allstate is run by the Klan!!!\” to give them.
Thanks all, and good luck.
My experience is as an insurance agent in MA for 25 years. Last year our primary carrier started using credit scores. The first 5 clients we put into the system came back as unacceptable. Three of them had been long time, claim free policyholders (6+ years)with the same carrier now rejecting them. Each had purchased a new home and wanted to purchase insurance from their existing company. When I complained to the marketing rep… voila.. a new (Choicepoint)system was implemented and suddenly one of the companies in their group because acceptable for the same people who had been denied; unfortunately we lost several of them due to the distasteful experience with the carrier. I don\’t agree with credit scoring as I also feel the agent has a better perspective on their client…resulting in 5 figure contingency check! That is why we are called Professional Insurance Agents…we are professional! Happy New Year to all!
QUOTE: \”It is more likely that a person with bad credit will cost the insurer money. It\’s actuarial statistical fact.\”
I am not saying this is true or not true. If it is true, why haven\’t figures been realeased to show this? Why haven\’t the companies or the regulators or anyone else released the studies with the hard numbers?
Does this even exist? If so, please tell me where to access this information.
1. Credit algorithms are not secret in some states such as Texas. I myself have copies of TransUnion, Choicepoint, Progressive, etc algorithms obtained from the TDI.
2. Using credit for underwriting alone relegates poor scoring folks to non-standard carriers. Allowing credit to be used for rating, allows standard carriers to write high risks.
3. Credit scoring works. I know one company that reduced its fire claims 60% in a year by implementing credit underwriting/rating! The head of the company personally told me this.
4. The issue here is not whether credit works, but that companies using credit are alleged not to have followed the rules!
As an insurance agent in the State of NY for over 30 years, the use of credit score, or insurance score as the insurance companies would like us to name it, is an insult to any intelligent human being. Anyone who agrees with it use only see it from a selfish prespective and that\’s usually the insurance company. There is no correlation between a credit score and driving. There is no correlation between credit scores and owning a house. This is just a way for the insurance comapnies to charge more based on a tool call \”segmentation\”. Instead of one table rate, segmentation delivers many and it is driven by credit and other factors. There are no hard evidence to support it but the insurance companies are doing their best to make our politicans believe it is true. Only the smart politicans, like the new Governor-elect of the State of New York, Elliot Spitzer, will recognize it for what it is. It is a system of greed based on contrived data to drive the product up for people who don\’t always pay on time. The system is discriminating against low income people which are usually minorities. I see it everyday and it is a crying shame that for people who can earn big money, they are the ones who usually pay more. The use of credit score should be ban throughout the entire 50 States because it also drive Identity Theft. The hackers are getting right into the companies that supply the \”insurance scores\” and now the consumer is victimized once again. That is the only correlation that credit scores provide, possible theft of your social security number and all your other personal data. So let your State Senator know that you object to it and maybe there will be more than 13 States seeking a ban on its use.
The real topic for the insurance industry is demonstrating the complex metrics of the \”insurance score\” of which credit is only one of many complex factors. Since the introduction of insurance scoring and predictive credit modeling in Connecticut, we have seen incredible decreases in the vas majority of our client\’s premiums being paid for auto and homeowner\’s insurance.
At the very same time, insurance companies have begun offering more choice and broader markets for more difficult risks. The Connecticut Assigned Risk plan is at an all time low participation rate, (based on the last posted numbers) indicating that the voluntary market is working extremely efficiently to provide affordable insurance to the marketplace.
Change is uncomfortable, but not always bad.
JB
Enough is enough. State regulated insurance with rates based on historical risk factors that are directly related to the insured risk. Only allow a 10% max profit to those underwriting / administering the program. Thus, no more profit motive, no more need to look for biased ways to redline and make irrationally exhuberant profits. JUSTICE FOR ALL – REASONABLE PREMIUMS FOR ALL.
JB,
That is our experience. Aisus.com builds online rating for insurance companies. We have seen companies \’open\’ up to more difficult risks using our technology to rate/underwrite online with scoring.
When I hear agents complaining about scoring, I believe they don\’t know their own markets. Captive and leading independent carriers like Progressive are taking better risks out of the independent agency. The business walking into the independent agency is of higher risk on average than 5-10 years ago because of this. The companies we represent have noticed a decline in \’good\’ scoring new business as that business migrates. More and more business is business that has had rates significantly increased or dropped due to scoring with captive companies.
Scoring is good for independent agents because the companies they write for will be able to implement the same policies as State Farm, Progressive, etc making them competitive.
First and foremost, there is no such thing as walk-in business. The professional independent recieves over 90% of their business by referral. Your numbers are significant because the independent agency today is burning and churning for survival. The older established agancies are still field underwriting new business at a high profit rate of return. Statistics are good tools, however, it takes knowlege and experience to understand how the results were actually derived. Progressive has taken a huge market share, however, in the next five years the multi-line carriers will take back those lost policies where multi-policy discounts will beat their mono-line rate. Further more, Progressive has always cut the agents commissions so the independent agent will be glad to rewrite Progressive autos along with their homes, and umbrella\’s. Only time will tell.
You gotta be kidding!
You want me to pay higher premiums so that folks that make poor decisions can get insurance cheaper???
This is what insurance is about, measuring risk and insuring it as accurately as possible, and that is why companies like Progressive are winners in this game. They are a whole level above any other player in the game when it comes to know and pricing auto risks.
Tell me truthfully, should you pay the same rate as a driver with a CNI and a couple of DWIs, and three AFAs? Should you pay the same rate as a homeowner with two complete fire losses, multiple minor non-wind claims, on the coast, and in a flood zone? If you say yes, then I can only say that you are not responding to logical arguments.
Governments and courts decide what are \”fair\” risk criteria. Any company that does not use these criteria to the fullest extent of the law is endangering the company.
What you are proposing is that we get rid of insurance agents and companies and all submit to a government pool so that we get the same rate for insurance….I think thats called communism or some kind of ism, but not America. This is a land of choices and repercussions and insurance rates are a free market form of repercussion.