Sure you think it is great. Hey, I think it is great because credit scoring gave me a better rate too. However, I also was able to avoid filing a claim because I could afford to fix some minor hail damage myself. I can also have a higher deductible because I can afford to pay the higher deductible if I have a loss.
What about the individuals that struggle to pay their bills, cannot self fund any damages, and cannot afford higher deductibles? Just because someone struggles does not mean they are not god risks.
Imagine this scenario… an indiviudal self-funds a bumper replacement when they run into the garage door. Two months later, they back into a light pole. The person again buys a new bumper. No claims are filed but this is not a person that is paying enough attention to how they drive. Six months later the same person causes a major accident and injures three people. They are not a good risk but instead of three claims, they only show one.
Why should they receive lower rates just because they can afford to pay bills on time and self-pay minor damages? I don\’t think the credit score models take into consideration personal economics and how it influences the incident of claims correlation.
And just how would I know that credit scoring is a valid predictor?? Do I take the word of the major information companies that built a \’solution\’ that would make underwriters reliant upon their databases? Do I trust the company executive who tells me that his company\’s claims analysis validated the claims of the information giants? Then why wouldn\’t he share the report? Agent, do I take your word because you wouldn\’t steer me wrong?
I\’ve been in the industry for over 30 years and along the way conducted claims analyses on the multi-state books of business that my underwriters managed. I have yet to find anyone willing to share their detailed analyses with me. I\’ve also worked for a major insurance information provider and understand how their business plan calls for embedding the company \’solutions\’ into P/C insurers automated systems. It assures their financial well-being for years to come.
I\’m not from Missouri but I think \”show me\” is appropriate in this case. Yes, it is ususally an emotional, unscientific response when detractors rip credit scoring. It is also not \’fact\’ that credit scoring is a valid predictor until I see the details. Heresay doesn\’t cut it. Can anyone point me to such documentation?
The one thing that no one mentions…..Insurance companies RAISED their BASE rate over 50% so they could give you a discount of up to 30 – 40%. So even if you get the biggest discount, you\’re still paying more!!!
Do you want to use a 30% discount in a store that just raised their rates over 50%???? I don\’t!!
There are a few independent studies out there analyzing the correlation between credit and claim risk. Two in particular have been found to be very credible. One was conducted by an actuarial group called EPIC, and the other was done by the University of Texas.
I always had a good loss ratio, and had my office in primarily a working class neighborhood. Many of these customers did not have bank accounts or credit cards but paid cash for their insurance premiums, they were good customers, but received higher rates because of no credit history, also retired persons who had their homes paid for and owed no bills and did not deal in credit had higher rates , no credit history, some of my customers who had been insured for years with Farmers and had good loss history paid higher premiums because they got laid off their jobs and got behind in some of their payments. Not Fair
Not fair to who – just to those whose credit is not great. How about those of us who have good credit, worked hard to keep good credit and who you now want to subsidize those who statistically have more losses? How about the insurance company that needs solid actuarial data on which to generate rates that are both competitive and profitable?
Credit scores, for all their emotional impact, are valid predictors of losses. All of the arguments that I hear against credit scoring are emotionally based. Let\’s get real and realize that life isn\’t, and can\’t be, \”fair\” to everyone because \”fair\” is defined to support someone\’s claim of unfairness.
The judge did the right thing and so will the jury. For all of you who have been mislead by all the hype and rhetoric from Fair Issacs and the company execs, let me assure you, THERE IS NO DISCERNABLE CORRELATION BETWEEN CREDIT SCORING, DRIVING, AND HOME LOSSES. Have the company exec show you the non-cat loss ratios ranked by credit score and you will finally realize that it\’s just a way for the companies to unfairly discriminate against certain groups that have other legal protections. They have simply tried to circumvent this and they will crash and burn in a big, AND COSTLY, way. Anyone who doesn\’t understand this is just plain ignorant…. Doug B. (OKC)
Yes, there is a \”correlation\” between credit score and loss ratio. The problem is that no one has yet figured out (that I know of) exactly what that correlation is and therefore, cannot tell us whether it is already accounted for in other rating factors. I\’ve seen the graphs showing how credit score and loss ratio track…but how does this credit score and the loss ratio compare to the population as a whole? If other words, if 1/2 the population has a credit score in the 500 range and only 10% have a credit score in the 750 range, wouldn\’t you expect more losses in the 500 range than in the 750 range? Or, if a higher percentage of those with a credit score in the 500 range are 30 or less years old (very likely since they don\’t have a 7 year history on unsecured credit)and the highest percentage of those whose credit score is 750 are between the ages of 40-60, is the loss ratio better because of the credit score or because of the maturity of the insured?
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Sure you think it is great. Hey, I think it is great because credit scoring gave me a better rate too. However, I also was able to avoid filing a claim because I could afford to fix some minor hail damage myself. I can also have a higher deductible because I can afford to pay the higher deductible if I have a loss.
What about the individuals that struggle to pay their bills, cannot self fund any damages, and cannot afford higher deductibles? Just because someone struggles does not mean they are not god risks.
Imagine this scenario… an indiviudal self-funds a bumper replacement when they run into the garage door. Two months later, they back into a light pole. The person again buys a new bumper. No claims are filed but this is not a person that is paying enough attention to how they drive. Six months later the same person causes a major accident and injures three people. They are not a good risk but instead of three claims, they only show one.
Why should they receive lower rates just because they can afford to pay bills on time and self-pay minor damages? I don\’t think the credit score models take into consideration personal economics and how it influences the incident of claims correlation.
And just how would I know that credit scoring is a valid predictor?? Do I take the word of the major information companies that built a \’solution\’ that would make underwriters reliant upon their databases? Do I trust the company executive who tells me that his company\’s claims analysis validated the claims of the information giants? Then why wouldn\’t he share the report? Agent, do I take your word because you wouldn\’t steer me wrong?
I\’ve been in the industry for over 30 years and along the way conducted claims analyses on the multi-state books of business that my underwriters managed. I have yet to find anyone willing to share their detailed analyses with me. I\’ve also worked for a major insurance information provider and understand how their business plan calls for embedding the company \’solutions\’ into P/C insurers automated systems. It assures their financial well-being for years to come.
I\’m not from Missouri but I think \”show me\” is appropriate in this case. Yes, it is ususally an emotional, unscientific response when detractors rip credit scoring. It is also not \’fact\’ that credit scoring is a valid predictor until I see the details. Heresay doesn\’t cut it. Can anyone point me to such documentation?
The one thing that no one mentions…..Insurance companies RAISED their BASE rate over 50% so they could give you a discount of up to 30 – 40%. So even if you get the biggest discount, you\’re still paying more!!!
Do you want to use a 30% discount in a store that just raised their rates over 50%???? I don\’t!!
Hey Rick…
There are a few independent studies out there analyzing the correlation between credit and claim risk. Two in particular have been found to be very credible. One was conducted by an actuarial group called EPIC, and the other was done by the University of Texas.
I always had a good loss ratio, and had my office in primarily a working class neighborhood. Many of these customers did not have bank accounts or credit cards but paid cash for their insurance premiums, they were good customers, but received higher rates because of no credit history, also retired persons who had their homes paid for and owed no bills and did not deal in credit had higher rates , no credit history, some of my customers who had been insured for years with Farmers and had good loss history paid higher premiums because they got laid off their jobs and got behind in some of their payments. Not Fair
Not fair to who – just to those whose credit is not great. How about those of us who have good credit, worked hard to keep good credit and who you now want to subsidize those who statistically have more losses? How about the insurance company that needs solid actuarial data on which to generate rates that are both competitive and profitable?
Credit scores, for all their emotional impact, are valid predictors of losses. All of the arguments that I hear against credit scoring are emotionally based. Let\’s get real and realize that life isn\’t, and can\’t be, \”fair\” to everyone because \”fair\” is defined to support someone\’s claim of unfairness.
Thanks Guru, I\’ll do a little research.
The judge did the right thing and so will the jury. For all of you who have been mislead by all the hype and rhetoric from Fair Issacs and the company execs, let me assure you, THERE IS NO DISCERNABLE CORRELATION BETWEEN CREDIT SCORING, DRIVING, AND HOME LOSSES. Have the company exec show you the non-cat loss ratios ranked by credit score and you will finally realize that it\’s just a way for the companies to unfairly discriminate against certain groups that have other legal protections. They have simply tried to circumvent this and they will crash and burn in a big, AND COSTLY, way. Anyone who doesn\’t understand this is just plain ignorant…. Doug B. (OKC)
I like the online credit score calculator at
http://www.moneyforums.co.uk/credit_score_calculator.php
It allows me to play around with the various options so
that I can figure out what to do or say to up my credit
score rating, very useful :)
Cheers !
Joanne.
Yes, there is a \”correlation\” between credit score and loss ratio. The problem is that no one has yet figured out (that I know of) exactly what that correlation is and therefore, cannot tell us whether it is already accounted for in other rating factors. I\’ve seen the graphs showing how credit score and loss ratio track…but how does this credit score and the loss ratio compare to the population as a whole? If other words, if 1/2 the population has a credit score in the 500 range and only 10% have a credit score in the 750 range, wouldn\’t you expect more losses in the 500 range than in the 750 range? Or, if a higher percentage of those with a credit score in the 500 range are 30 or less years old (very likely since they don\’t have a 7 year history on unsecured credit)and the highest percentage of those whose credit score is 750 are between the ages of 40-60, is the loss ratio better because of the credit score or because of the maturity of the insured?