There is no easy answer. If you look at states that ignore credit like…dare I say…California, you don’t have that pricing disadvantage. Most carriers that I know of in FL that don’t use credit are the high risk carriers. Of course they’re going to have a pricing disadvantage already.
I’m not object to using credit as a guideline in the underwriting process. I AM object to using credit as more than 10 to 15% of the total premium. There’s no reason you should be able to quote customer X with Company A for $400 and Company B for $900 when customer Y is $900 with Company A and $600 with company B using the same variables in claims, age, and driving experience.
@Mr Solvent
You would limit the CBIS impact on auto or HO rate to 10 to 15% even if the claim cost spread from lowest score to highest was 400%?
It is that great in personal lines, both auto and HO, even after neutralizing all other rating factors.
So are you in favor of wealth redistribution from the lowest cost drivers/homeowners to the highest cost?
Sue
PS: NCOIL basically prohibits risk selection/underwriting based solely on credit.
No I don’t need more protection, just less goverment (aka regulation & taxes). As a NY agency owner, the federal, state and local goverment is doing it’s best to strangle agencies (small businesses), which are the engine of our economy. The results of which are self-evident. Hard work, integrity and customer loyalty = productivity. No need for gov’t to meddle in that equation, which has worked for Americans for 234 years.
Then why is it on a no hit the rate can more than double as opposed to a good credit client? Come on! You really are just a tool for the industry aren’t you?
A claim is a claim no matter who files it. Zip code, loss history, driving record (on auto), age…these are thing that should be used to determine rates.
The ONLY way to stop Ins Fraud is swift & sure punishment of the violator. Criminally with fines & community service.
Civilly by denial of the phony claim in it’s entirety and cancellation of the violators current policy. It works!!!!!
@Mr Solvent
Thanks for the question. Here are the typical numbers. If the median CBIS group has a claim index of 100, the worst CBIS will have a claim cost of about 200 (up to 300 in some extreme cases). From the same median the best score group will have a claim cost index of around 50. So, a “neutral” would be about twice as high as the best.
Thanks again for the question.
Sue
“predictors” and “modeling” as they relate to this topic are irrelvant. The bottom line is that people are either honest and have integrity or they don’t. Credit scores, education, and wealth are secondary….usually what’t easier to deal with by those who don’t understand the business. With 40 years in claims management including 16 “on the street”, it’s been proven over and over again.
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.
There is no easy answer. If you look at states that ignore credit like…dare I say…California, you don’t have that pricing disadvantage. Most carriers that I know of in FL that don’t use credit are the high risk carriers. Of course they’re going to have a pricing disadvantage already.
I’m not object to using credit as a guideline in the underwriting process. I AM object to using credit as more than 10 to 15% of the total premium. There’s no reason you should be able to quote customer X with Company A for $400 and Company B for $900 when customer Y is $900 with Company A and $600 with company B using the same variables in claims, age, and driving experience.
@Mr Solvent
You would limit the CBIS impact on auto or HO rate to 10 to 15% even if the claim cost spread from lowest score to highest was 400%?
It is that great in personal lines, both auto and HO, even after neutralizing all other rating factors.
So are you in favor of wealth redistribution from the lowest cost drivers/homeowners to the highest cost?
Sue
PS: NCOIL basically prohibits risk selection/underwriting based solely on credit.
No I don’t need more protection, just less goverment (aka regulation & taxes). As a NY agency owner, the federal, state and local goverment is doing it’s best to strangle agencies (small businesses), which are the engine of our economy. The results of which are self-evident. Hard work, integrity and customer loyalty = productivity. No need for gov’t to meddle in that equation, which has worked for Americans for 234 years.
Sue,
Then why is it on a no hit the rate can more than double as opposed to a good credit client? Come on! You really are just a tool for the industry aren’t you?
A claim is a claim no matter who files it. Zip code, loss history, driving record (on auto), age…these are thing that should be used to determine rates.
The ONLY way to stop Ins Fraud is swift & sure punishment of the violator. Criminally with fines & community service.
Civilly by denial of the phony claim in it’s entirety and cancellation of the violators current policy. It works!!!!!
I could be wrong but I thought in FL now the “no hit” was suppose to be “rate nuetral”.
@Mr Solvent
Thanks for the question. Here are the typical numbers. If the median CBIS group has a claim index of 100, the worst CBIS will have a claim cost of about 200 (up to 300 in some extreme cases). From the same median the best score group will have a claim cost index of around 50. So, a “neutral” would be about twice as high as the best.
Thanks again for the question.
Sue
So let me get this straight. Following consumer logic, if I get poor service from the waitress at the restaurant, it’s ok to steal the tablecloth?
Good grief.
Here is one from the FTC in 2007:
article on it…
http://www.ftc.gov/opa/2007/07/facta.shtm
the actual report…
http://www.ftc.gov/os/2007/07/P044804FACTA_Report_Credit-Based_Insurance_Scores.pdf
“predictors” and “modeling” as they relate to this topic are irrelvant. The bottom line is that people are either honest and have integrity or they don’t. Credit scores, education, and wealth are secondary….usually what’t easier to deal with by those who don’t understand the business. With 40 years in claims management including 16 “on the street”, it’s been proven over and over again.