There is a reason why insurance score is the first criteria for underwriting and the sole determinant as to whether a risk gets into the preferred tier…it works! And it is statistically more significant than any other factor your company or any other has devised to predict risk. More powerful than MVR, education, driving history, age, etc. And much easier to access and more accurate than any of the others, despite some erroneous studies to the contrary. Believe me, nobody would go to the expense of researching it, deriving it, proving it, and defending it if it were not valid.
You folks calling for only three core variables to a credit score as being valid is like someone from the Department of Transportation stating that only at fault accidents, Reckless Driving and Careless Driving tickets are the only violations that should be used from motor vehicle records. That speeding, failure to yield, and the host of other entries are invalid. Statistics prove otherwise.
It’s curious why it’s so difficult to accept that variables blind to income, race, religion and so-forth do correlate to higher risk, thus justify higher cost.
It’s also curious why scoring seems to have one set of rules, but existing underwriting statistics are ok to have another set of rules. For instance, why not a study that is likely to indicate unfair pricing on older homes, causing a disparate impact on lower income and minorities?
Why not a study showing states with greater percentage of minorities or lower income with higher insurance rates than other states with lower ratios of same, showing this to be wrong too?
Why is it ok to “over charge” young people for auto insurance where the ONLY variables used are age, sex, and inexperience? Hey, the majority of young males do NOT have claims, yet they pay a much greater rate since they have a higher risk of causing a claim, or have we forgotten the basic principles of insurance, you know, fairly economically spreading the risk. Oh yea, we’re in the age of socialism, it’s not politically correct to treat one person one iota different from another for any reason.
Say, I know a great island south of Florida you out to consider moving to…
You can make statistics do whatever you want them to do.
The problem I have with risk assessment scoring for auto is that it is the first underwriting criteria, at least in my company, and outweighs all other traditional criteria such as driving history, MVR and CLUE, age, rate class, etc.
If someone has a poor credit score, NO MATTER all the other good things about them, they do not qualify for our preferred company. That’s wrong.
It was sad the day the small community banks became practically extinct and loans and repayment of them handled with good faith and a handshake, even though credit might be somewhat on the ‘edge’, went by the wayside. I know because my spouse was vice-president of one such bank and the days of community and neighbors are practically gone.
Now, everyone is ‘judged’ on a credit score and we wonder where the people with ‘character’ are?!
I am one such person that a few years ago would have been denied insurance based on my credit score alone because of a devestating financial loss BUT I still continued to earn an above average salary, pay my bills, maintain a home, put my children through college and did NOT file any claims.
We all think technology and the tools we use now make us so much better…is that the reason we don’t use our brains and hearts anymore?
The company that I work for does not use credit scoring, you might think that our results would be terrible because of the adverse selection. Our rates are very competitive and we continue to grow yearly with a three yr HO loss ratio in the 40s. It is a cheap way to underwrite anyone can decline or rate up for a low c/s number, as a begining underwriter I was taught to look for the profitable risk. A credit score does not cost the company anything it is the claims that raise the loss ratio.
I hope the other cos. are allowed to contine to use c/s as their claim free rejects have made us profitable.
You point to the statistics of the correlation between risk and credit scores, but you FAILED to mention any statistics on the ACCURACY OF CONSUMER CREDIT REPORTS!!!! “They have gone to the trouble to research, derive, prove and defend it because it makes people like you more money. It is an unethical, discriminatory practice that people such as yourself want to validate in the name of the all mighty dollar.
Haven\’t we all been complaining that we don\’t want our rates to go up because OTHER people have all the claims? For years I have heard complaints from the penny-penchers and tight-wads (like my father and grandfather) about how unfair it is that we have to pay for others\’ claims. The use of the insurance credit score is being used because it has been proven that there is a definite correlation between insurance score and the propensity to sustain a loss. Therefore, it\’s used to more accurately match price to risk. People who are more likely to cause/sustain a loss should have to pay higher premium. Claims aren\’t paid with monopoly money.
I think we also need to get real. So some minorities have lower income and lower credit scores. It\’s not the color of their skin that makes them irresponsible. I know plenty of minorities that know how to keep their finances in order.
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 a reason why insurance score is the first criteria for underwriting and the sole determinant as to whether a risk gets into the preferred tier…it works! And it is statistically more significant than any other factor your company or any other has devised to predict risk. More powerful than MVR, education, driving history, age, etc. And much easier to access and more accurate than any of the others, despite some erroneous studies to the contrary. Believe me, nobody would go to the expense of researching it, deriving it, proving it, and defending it if it were not valid.
Insurers should only be concerned with durability, quantity, and quality of the income.
Charlene Flickinger Loan Originator
I couldnt agree more!
You folks calling for only three core variables to a credit score as being valid is like someone from the Department of Transportation stating that only at fault accidents, Reckless Driving and Careless Driving tickets are the only violations that should be used from motor vehicle records. That speeding, failure to yield, and the host of other entries are invalid. Statistics prove otherwise.
It’s curious why it’s so difficult to accept that variables blind to income, race, religion and so-forth do correlate to higher risk, thus justify higher cost.
It’s also curious why scoring seems to have one set of rules, but existing underwriting statistics are ok to have another set of rules. For instance, why not a study that is likely to indicate unfair pricing on older homes, causing a disparate impact on lower income and minorities?
Why not a study showing states with greater percentage of minorities or lower income with higher insurance rates than other states with lower ratios of same, showing this to be wrong too?
Why is it ok to “over charge” young people for auto insurance where the ONLY variables used are age, sex, and inexperience? Hey, the majority of young males do NOT have claims, yet they pay a much greater rate since they have a higher risk of causing a claim, or have we forgotten the basic principles of insurance, you know, fairly economically spreading the risk. Oh yea, we’re in the age of socialism, it’s not politically correct to treat one person one iota different from another for any reason.
Say, I know a great island south of Florida you out to consider moving to…
You can make statistics do whatever you want them to do.
The problem I have with risk assessment scoring for auto is that it is the first underwriting criteria, at least in my company, and outweighs all other traditional criteria such as driving history, MVR and CLUE, age, rate class, etc.
If someone has a poor credit score, NO MATTER all the other good things about them, they do not qualify for our preferred company. That’s wrong.
This is auto insurance; no loan qualification.
It was sad the day the small community banks became practically extinct and loans and repayment of them handled with good faith and a handshake, even though credit might be somewhat on the ‘edge’, went by the wayside. I know because my spouse was vice-president of one such bank and the days of community and neighbors are practically gone.
Now, everyone is ‘judged’ on a credit score and we wonder where the people with ‘character’ are?!
I am one such person that a few years ago would have been denied insurance based on my credit score alone because of a devestating financial loss BUT I still continued to earn an above average salary, pay my bills, maintain a home, put my children through college and did NOT file any claims.
We all think technology and the tools we use now make us so much better…is that the reason we don’t use our brains and hearts anymore?
The company that I work for does not use credit scoring, you might think that our results would be terrible because of the adverse selection. Our rates are very competitive and we continue to grow yearly with a three yr HO loss ratio in the 40s. It is a cheap way to underwrite anyone can decline or rate up for a low c/s number, as a begining underwriter I was taught to look for the profitable risk. A credit score does not cost the company anything it is the claims that raise the loss ratio.
I hope the other cos. are allowed to contine to use c/s as their claim free rejects have made us profitable.
You point to the statistics of the correlation between risk and credit scores, but you FAILED to mention any statistics on the ACCURACY OF CONSUMER CREDIT REPORTS!!!! “They have gone to the trouble to research, derive, prove and defend it because it makes people like you more money. It is an unethical, discriminatory practice that people such as yourself want to validate in the name of the all mighty dollar.
Haven\’t we all been complaining that we don\’t want our rates to go up because OTHER people have all the claims? For years I have heard complaints from the penny-penchers and tight-wads (like my father and grandfather) about how unfair it is that we have to pay for others\’ claims. The use of the insurance credit score is being used because it has been proven that there is a definite correlation between insurance score and the propensity to sustain a loss. Therefore, it\’s used to more accurately match price to risk. People who are more likely to cause/sustain a loss should have to pay higher premium. Claims aren\’t paid with monopoly money.
I think we also need to get real. So some minorities have lower income and lower credit scores. It\’s not the color of their skin that makes them irresponsible. I know plenty of minorities that know how to keep their finances in order.