Posted On: April 24, 2006, 4:09 pm CDT

Posted By: Underwriting Manager

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?