Washington Commissioner Hits Wrong Note on Use of Credit, Insurers Say

July 18, 2006

  • July 24, 2006 at 10:53 am
    Anonymous says:
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    people buy insurance to protect themselves from economic hardships caused by \”accidents\”, whether these accidents occur in the home, in the car, or elsewhere.

    credit score is an indicator for the level of economic hardship a person has.

    Because of this, the use of credit based insurance scoring creates economic hardships for those policyholders already suffering economic hardships. This may be considered \”fair\”, but I\’m not sure it should be considered \”right\”.

    Is the sale of an insurance policy equivalent to the sale of an investment, or is it the provision of a service?

  • July 24, 2006 at 12:35 pm
    Washington Agent says:
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    It is very important to consider the distinction between Credit Score and Insurance Score.

    These scoring models are mutually exclusive. Insurance scoring, for instance, does not consider debt to income ratios whereas Credit Scoring does. That part alone, I believe, takes the \”financial hardship\” element out of the issue.

    The Insurance Scoring addition to Risk Assessment is \”right\”.

    Fair, however, is relative. I think it will be fair and exepted as fair, when the formula/matrix is standardized and it\’s implementation is universal.

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