NAMIC Claims State Regulators' Drive to Implement Best Practices for Credit Scoring Use Not Necessary
National News • March 8, 2004
The National Association of Mutual Insurance Companies (NAMIC) called for cessation of an effort to create a "best practices" interpretation document on the use of insurance scores by the ...
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Subject: RE: Credit Score
Posted On: March 9, 2004, 3:53 pm CST
Posted By: JB
Comment:
Credit scoring is a deceptive, inaccurate tool used by the Insurance
Industry to manipulate several systems. These systems include, but are
not limited to, redlining or exclusion of certain classes of consumers
from products and services either through complete denial or through
discriminatory product pricing; rate manipulation by means of adjusting
internal, non regulated, underwriting tiers; and through questionable
proprietary secrecy which usurps the consumer’s ability to know or
become aware of how they are scored and the accuracy of these scores.
Whom do they prey upon most often?
* Minorities who live in areas designated as low income, high crime,
inner city, and poverty prone.
* Poorly educated who do not know how to protect themselves and feel
forced to accept the abuse.
* The poor, the ones can least afford to pay higher rates are being
driven into the substandard market.
* The Elderly, who have no debt are now penalized for retiring debt free
* Families with large medical debt
* Single mothers
These groups share commonalities. As individuals, they do not have the
means by which to defend themselves from this predatory practice. The
Insurance Industry knows this and exploits this knowledge to maintain
the separation of classes. By continuing the separation, those on the
bottom are forced to pay more and subsidize those at the top. Consumers
who have no history of claims are forced to pay higher rates simply
because they do not possess wealth.
With credit scoring insurance companies can now increase premiums
arbitrarily by manipulating the underwriting scoring and tiering.
Underwriting, which is not regulated, creates a gray area. By changing
the underwriting requirements, consumers can have their rates increased
or their policies rejected. This allows the companies to act without
regard to regulatory compliance. No oversight, no rate filing with the
Rating Commission, simply change the tiering cutoffs and take a rate
increase. Additionally, when companies have been asked to show why rates
and tiering changes have been made, how they are designed and adjusted,
they have refused. They claim their formulas as trade secrets and
proprietary intellectual property. When evidence has been presented,
which brings to light the discriminatory aspects and the potential
illegal act of redlining, companies again refuse to show the methodology
claiming the law and regulation allow them to discriminate.
Subject: RE: Credit Score
Industry to manipulate several systems. These systems include, but are
not limited to, redlining or exclusion of certain classes of consumers
from products and services either through complete denial or through
discriminatory product pricing; rate manipulation by means of adjusting
internal, non regulated, underwriting tiers; and through questionable
proprietary secrecy which usurps the consumer’s ability to know or
become aware of how they are scored and the accuracy of these scores.
Whom do they prey upon most often?
* Minorities who live in areas designated as low income, high crime,
inner city, and poverty prone.
* Poorly educated who do not know how to protect themselves and feel
forced to accept the abuse.
* The poor, the ones can least afford to pay higher rates are being
driven into the substandard market.
* The Elderly, who have no debt are now penalized for retiring debt free
* Families with large medical debt
* Single mothers
These groups share commonalities. As individuals, they do not have the
means by which to defend themselves from this predatory practice. The
Insurance Industry knows this and exploits this knowledge to maintain
the separation of classes. By continuing the separation, those on the
bottom are forced to pay more and subsidize those at the top. Consumers
who have no history of claims are forced to pay higher rates simply
because they do not possess wealth.
With credit scoring insurance companies can now increase premiums
arbitrarily by manipulating the underwriting scoring and tiering.
Underwriting, which is not regulated, creates a gray area. By changing
the underwriting requirements, consumers can have their rates increased
or their policies rejected. This allows the companies to act without
regard to regulatory compliance. No oversight, no rate filing with the
Rating Commission, simply change the tiering cutoffs and take a rate
increase. Additionally, when companies have been asked to show why rates
and tiering changes have been made, how they are designed and adjusted,
they have refused. They claim their formulas as trade secrets and
proprietary intellectual property. When evidence has been presented,
which brings to light the discriminatory aspects and the potential
illegal act of redlining, companies again refuse to show the methodology
claiming the law and regulation allow them to discriminate.