Actuaries Have Special Role When Explaining Credit Scores and Losses
National News • November 16, 2007
By explaining why there is an association between credit scores and insurance losses, insurers and actuaries can promote a better understanding of why credit scores are a useful underwriting tool, ...
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Subject: RE: RE: RE: using credit scores to raise insurance rates
Posted On: December 3, 2007, 8:36 am CST
Posted By: Dustin
Comment:
Deliberate? If you simply look at the people whose rates went up, then rating on accidents and driving history was a deliberate attempt to raise rates FOR THOSE WHO HAD A BAD DRIVING RECORD. The insurance company tries to obtain the correct rate on a risk, and in many cases (obviously there are anamolies) credit is also an indicator of risk. In the case of your elderly insureds, their bad credit does not necessarily indicate an increase of risky behavior; however, I can see where there is a correlation between risk takers with credit and money and risk takers on the road. Not to mention, lower credit could indicate a morale hazard and simply not caring about the property. Again, I don't want to characterize everyone, but credit is a way to rate for these other areas. You may say that if they take risks driving, then they will have a bad driving record, but that might not be the case. They may not have been caught, and might not be until that million dollar liability lawsuit. Credit fills in the gaps where driving record does not. Truthfully, how many times have you sped (enough over to get a ticket) and not gotten a ticket?
Subject: RE: RE: RE: using credit scores to raise insurance rates