Wow guess I have hit a nerve. You are right about corporate america they are profit driven by there shareholders. That in itself is not bad deriving by not doing the right thing is. Why do you believe we sent out millions of opt-out letters? They got caught selling data, now you are justifying that unauthorized data. It really is quite simple they gathered this data and found there were fewer claims with people with higher credit scores. That did not prove that those who were claims free whether they had higher credit scores were better drivers than those with lower scores, this would not be fair to those who did not have a claim. All good drivers should pay the same rate based on sound underwriting (experience driving,cites, and claims, and valid insurance costs (attorney penetration, hospitol costs,labor rates). Please quit trying to insult me, no matter how you slice it insured\’s who have no losses or claims ( same cost factors) should pay the same rate. I am sure if the characteristic that people with higher credit scores had more claims that would not even have an issue. So please get real because I have heard for years its a business decision live with it.
Once again Einstein you show you don\’t understand the word \”predective\”. Higher rates aren\’t charged for people who have losses because of the loss they had it is because they are more likely to have future losses. That can also be predicted based on where you live, your age, your gender, the car you drive and yes…. your credit score.
Once again your logic falls apart. So since the newly licensed 16 year old has no accidents he should pay the same as the 40 year old married male with no accidents….. doesn\’t work.
You have no idea how to price the product… just stick to selling.
Driving experience regardless of age states that you have no track record of good driving, therefore, you pay more. Please explain why claims free and cite free drivers (20 years no losses) should pay more money than someone with a higher credit score and has only been claims and accident free for 3 years. The issue here is not that credit tracking works, its just unfair to use this to determine a rate based on driving, experience, and claims. When you get favorable results by using unfair methods, regardless you are obligated to do the right thing. I have a philosphy \” when you ignore experience and knowledge you become arrogently ignorant\”. Credit scoring in the next 5 years will go down in flames, because its wrong. My family has been selling insurance for over 50 years and over 90% of those years profitable and I have no clue how to write profitable insurance WOW.
I didn\’t say you don\’t know how to write profitable insurance I said you don\’t know how to price it. There is a big difference!
I am sure you are a good agent. You just can\’t price based on predicting future losses. Yes someone with no losses and bad credit should pay more because they fit into a group that we can predict will have more losses that is exactly what pricing based on future loss potential is all about. What about the clean driver that lives in Brooklyn for 30 years with no losses? Why do they pay more than the clean driver that lives in rural NY State that has been clean for 30 years? Or better yet. Why do they pay more than the driver with 1 or maybe even 2 accidents in the past 5 years? Because they live in Brooklyn and even though they have been clean for 30 years they are in an area that is more likely to cost more and have more losses. It is the same thing. You just don\’t like that you can\’t hold it in your hand and look at it. Credit works! It may go away but we will be worse off for it.
Look at PRG they don\’t just do it by paying low commissions. Their ability to grow isn\’t because they pay 10% and everyone else pays 15% it is a variety of things but first and foremost it is because of their sophisticated pricing model. They must be able to offer more people lower prices by using credit or they wouldn\’t do it.
Sorry you are so resistant to progress and change.
We have many city (large), suburban, and rural clients. Theft is much higher in the city (higher comp), repair costs, and attorney penetration. That is why it is fair to charge identical drivers in these two settings different rates. Crystal ball forecasting using stastistics should be used for marketing strategy not rating. Progressive\’s challenge will be to keep there clients. They have very little agent/broker loyalty as a result of cutting commissions and spending that savings on advertising. As their client matures, buys more vehicles, and a home they will save money by switching to a more traditional carrier. As I wrote earlier only time will tell, but history in the industry tells us good news travel fast, and bad news even faster
Einstein I think we just disagree on how things should work. You want these predictive things to be used for underwriting and marketing. That would mean that those people who have \”negative\” predictive characteristics would not get insurance. No one would sell it to them or they would be denied insurance for underwriting reasons. So your solution is one rate or at least a limited rating plan with coverage available for the few. The theory of the \”progressive\” pricers is coverage for all but at the right price. That sure sounds less discriminatory than your way of pricing \”fairly\” but only providing coverage to the limtited few.
I remember when PRG was at $2 billion and everyone at the \”big companies\” said \”it is easy to grow by 20% when you are so small\” and then they got to $4 billion and they said the same thing. They are now, like it or not, a dominant force. The agents complain about commission all day and talk about how they are not loyal but they still put business with them and now they are growing direct. Trust me I have spent much of my career in the IA channel and want and need it to be successful but you can\’t deny that the PRG model keeps working.
Ok Ray you and Einstein seem to think certain things can be used as predictors and others can\’t. Which are they? It seems clear that credit is not. More because you don\’t understand the science behind predictive models than anything else. Zip seems ok, age seems ok. You say that credit isn\’t 100% but then you dispute when LLCJ and I say what about young drivers what about those with violations but no accidents. That is all about predicting losses but it isn\’t 100%. So how is it different? No rating variable is 100%
You say that driving record is much more reliable but that only shows how little you understand about rating and segmentation. In fact I would give up CLUE reports and MVRs long before I gave up credit reports. @80% of the market is clean but over 90% have a credit report. It is much more predictive and reliable.
What about model year on liability? Your argument would say it doesn\’t matter the year of the car for liability right? But it does! Model year is a predictor of future losses even for liability.
There are hundreds of competitors in this market place more than for any other product I can think of. Here is the bottom line bare bones facts. If someone can sell insurance for less they will. So why would companies choose to over price customers if someone else would just come in and write them for less and make money?
The answer is that the companies that don\’t use credit are losing their shirts from adverse selection. I have seen it over and over again.
Again only time will tell regarding Proressive. I still believe credit scoring is rewarded indirectly by other means of discounting. Progressive is growing in part because the the major companies like Farmers. Allstate, and Farmers have lost touch with the real world. I think we see the same results (Progressive) we differ on who to credit. The question is will the brokers, agents, and customers stay loyal, I believe that as fast as they grew they have a tough job on their hands.
I see historical value, and track record you value predicting. Twenty years ago i would probable agree with predicting, but I have learned many lessons from the past, and I still believe that predicting is an edcucated guess. Underwriting is a very complex formula, however, I still believe in right and wrong. Maybe it is true in the short term that Clue is not as good as credit scoring, but you see credit scoring still does not reward you for good driving and Clue does. Simple right and wrong.
Insurance scoring may work in a perfect world but it sure does make life difficult for an Agency Principal trying to explain to a long term customer who has no previous claims, a credit score of of 780+,and pays his premium in full yearly why his premium went up $200 REAL DOLLARS and then to find after talking to choicepoint and experian that the reason his score changed is because he purchased a RV.For goodness sake the guy is retired and has a six figure income!
Is this Fair?
What happened to good ol common sense?
Bt the way I have a customer who always pays late(most of the tome after receiving a cancellation notice )whose yearly rate dropped over $300.00 because guess what,He has a great Insurance Score!!
We have updated our privacy policy to be more clear and meet the new requirements of the GDPR. By continuing to use our site, you accept our revised Privacy Policy.
Wow guess I have hit a nerve. You are right about corporate america they are profit driven by there shareholders. That in itself is not bad deriving by not doing the right thing is. Why do you believe we sent out millions of opt-out letters? They got caught selling data, now you are justifying that unauthorized data. It really is quite simple they gathered this data and found there were fewer claims with people with higher credit scores. That did not prove that those who were claims free whether they had higher credit scores were better drivers than those with lower scores, this would not be fair to those who did not have a claim. All good drivers should pay the same rate based on sound underwriting (experience driving,cites, and claims, and valid insurance costs (attorney penetration, hospitol costs,labor rates). Please quit trying to insult me, no matter how you slice it insured\’s who have no losses or claims ( same cost factors) should pay the same rate. I am sure if the characteristic that people with higher credit scores had more claims that would not even have an issue. So please get real because I have heard for years its a business decision live with it.
Once again Einstein you show you don\’t understand the word \”predective\”. Higher rates aren\’t charged for people who have losses because of the loss they had it is because they are more likely to have future losses. That can also be predicted based on where you live, your age, your gender, the car you drive and yes…. your credit score.
Once again your logic falls apart. So since the newly licensed 16 year old has no accidents he should pay the same as the 40 year old married male with no accidents….. doesn\’t work.
You have no idea how to price the product… just stick to selling.
Driving experience regardless of age states that you have no track record of good driving, therefore, you pay more. Please explain why claims free and cite free drivers (20 years no losses) should pay more money than someone with a higher credit score and has only been claims and accident free for 3 years. The issue here is not that credit tracking works, its just unfair to use this to determine a rate based on driving, experience, and claims. When you get favorable results by using unfair methods, regardless you are obligated to do the right thing. I have a philosphy \” when you ignore experience and knowledge you become arrogently ignorant\”. Credit scoring in the next 5 years will go down in flames, because its wrong. My family has been selling insurance for over 50 years and over 90% of those years profitable and I have no clue how to write profitable insurance WOW.
I didn\’t say you don\’t know how to write profitable insurance I said you don\’t know how to price it. There is a big difference!
I am sure you are a good agent. You just can\’t price based on predicting future losses. Yes someone with no losses and bad credit should pay more because they fit into a group that we can predict will have more losses that is exactly what pricing based on future loss potential is all about. What about the clean driver that lives in Brooklyn for 30 years with no losses? Why do they pay more than the clean driver that lives in rural NY State that has been clean for 30 years? Or better yet. Why do they pay more than the driver with 1 or maybe even 2 accidents in the past 5 years? Because they live in Brooklyn and even though they have been clean for 30 years they are in an area that is more likely to cost more and have more losses. It is the same thing. You just don\’t like that you can\’t hold it in your hand and look at it. Credit works! It may go away but we will be worse off for it.
Look at PRG they don\’t just do it by paying low commissions. Their ability to grow isn\’t because they pay 10% and everyone else pays 15% it is a variety of things but first and foremost it is because of their sophisticated pricing model. They must be able to offer more people lower prices by using credit or they wouldn\’t do it.
Sorry you are so resistant to progress and change.
We have many city (large), suburban, and rural clients. Theft is much higher in the city (higher comp), repair costs, and attorney penetration. That is why it is fair to charge identical drivers in these two settings different rates. Crystal ball forecasting using stastistics should be used for marketing strategy not rating. Progressive\’s challenge will be to keep there clients. They have very little agent/broker loyalty as a result of cutting commissions and spending that savings on advertising. As their client matures, buys more vehicles, and a home they will save money by switching to a more traditional carrier. As I wrote earlier only time will tell, but history in the industry tells us good news travel fast, and bad news even faster
Einstein I think we just disagree on how things should work. You want these predictive things to be used for underwriting and marketing. That would mean that those people who have \”negative\” predictive characteristics would not get insurance. No one would sell it to them or they would be denied insurance for underwriting reasons. So your solution is one rate or at least a limited rating plan with coverage available for the few. The theory of the \”progressive\” pricers is coverage for all but at the right price. That sure sounds less discriminatory than your way of pricing \”fairly\” but only providing coverage to the limtited few.
I remember when PRG was at $2 billion and everyone at the \”big companies\” said \”it is easy to grow by 20% when you are so small\” and then they got to $4 billion and they said the same thing. They are now, like it or not, a dominant force. The agents complain about commission all day and talk about how they are not loyal but they still put business with them and now they are growing direct. Trust me I have spent much of my career in the IA channel and want and need it to be successful but you can\’t deny that the PRG model keeps working.
Ok Ray you and Einstein seem to think certain things can be used as predictors and others can\’t. Which are they? It seems clear that credit is not. More because you don\’t understand the science behind predictive models than anything else. Zip seems ok, age seems ok. You say that credit isn\’t 100% but then you dispute when LLCJ and I say what about young drivers what about those with violations but no accidents. That is all about predicting losses but it isn\’t 100%. So how is it different? No rating variable is 100%
You say that driving record is much more reliable but that only shows how little you understand about rating and segmentation. In fact I would give up CLUE reports and MVRs long before I gave up credit reports. @80% of the market is clean but over 90% have a credit report. It is much more predictive and reliable.
What about model year on liability? Your argument would say it doesn\’t matter the year of the car for liability right? But it does! Model year is a predictor of future losses even for liability.
There are hundreds of competitors in this market place more than for any other product I can think of. Here is the bottom line bare bones facts. If someone can sell insurance for less they will. So why would companies choose to over price customers if someone else would just come in and write them for less and make money?
The answer is that the companies that don\’t use credit are losing their shirts from adverse selection. I have seen it over and over again.
Again only time will tell regarding Proressive. I still believe credit scoring is rewarded indirectly by other means of discounting. Progressive is growing in part because the the major companies like Farmers. Allstate, and Farmers have lost touch with the real world. I think we see the same results (Progressive) we differ on who to credit. The question is will the brokers, agents, and customers stay loyal, I believe that as fast as they grew they have a tough job on their hands.
I see historical value, and track record you value predicting. Twenty years ago i would probable agree with predicting, but I have learned many lessons from the past, and I still believe that predicting is an edcucated guess. Underwriting is a very complex formula, however, I still believe in right and wrong. Maybe it is true in the short term that Clue is not as good as credit scoring, but you see credit scoring still does not reward you for good driving and Clue does. Simple right and wrong.
Insurance scoring may work in a perfect world but it sure does make life difficult for an Agency Principal trying to explain to a long term customer who has no previous claims, a credit score of of 780+,and pays his premium in full yearly why his premium went up $200 REAL DOLLARS and then to find after talking to choicepoint and experian that the reason his score changed is because he purchased a RV.For goodness sake the guy is retired and has a six figure income!
Is this Fair?
What happened to good ol common sense?
Bt the way I have a customer who always pays late(most of the tome after receiving a cancellation notice )whose yearly rate dropped over $300.00 because guess what,He has a great Insurance Score!!