Posted On: October 4, 2006, 12:04 pm CDT

Posted By: Jacqueline

I have only been doing personal auto and home for a little less than 2 years, but I'm a quick study. The thing that bugged me was that I have several loyal customers who have kept their policies in force without interruption and who have had no incidents, yet their rates went up. Trying to be a good agent, I faxed written requests to the policy upload research departments of the carriers I am appointed with to find out why these customers rates had gone up when the rates had not gone up overall as a general rate increase, citing the customers' good driving records and renewals and continuous coverage. I never got ANY response at all, did not know what to say to these customers when they got angry and wanted to know why their rates went up. They just wanted an answer but I didn't know what to tell them because the companies wouldn't tell me anything so I was left on my own with no clue trying to deal with angry customers. Then last week when my own policy came up for renewal, I got an email alert from Citibank Credit Monitoring Services notifying me that an inquiry was made on my credit report.

Following the links, I was able to acertain that the carrier had checked my credit right before renewal! I called the carrier to ask why they pulled my credit report. I was told, "That's part of the review of the insurance credit scoring process the company does to determine what rating teir I belong in."

I did some additional digging and looked this up on the Internet. I found out that countless people have been adversely affected by this. I also found the most pathetic, laughable "case study" done by EPIC that claimed the low income (seniors, the disabled, women, etc) were not adversely affected in general as a group. (What a crock!)

Now, if you are low income or are struggling to live paycheck to paycheck, and just one thing goes wrong in your life - a sick child or spouse, a lay-off, a disability, a major appliance repair, etc - obviously your credit is NOT going to be good because you don't have enough income to have any safety net to cover all your bills - hence, your credit is adversely impacted. But as volitile and fragile as so many Americans are financially, behaviors are NOT as volitile and are indeed quite predictable. Someone with a long standing record of safety consciousness behind the wheel on the road is not going to drastically change their driving habits because of their credit going to the basement.

But the spokesman championing this "study", which Yodar has rightly called junk science, was quoted as to having said, "The lower income population files more "small" claims and with higher frequency since they do not have the resources to be able to afford to absorb a loss without needing compensation from the insurance company whereas the higher income people are more claims conscious."

Since insurance IS a for-profit business, I understand that insurance companies are seeking better ways to minimize claims. But what causes claims? Losses occurring! If there isn't a loss in the first place, there isn't a claim! So who is more prone to causing a loss? The guy with 2 DUI's within the last 5 years who just happens to have a good job enabling him to maintain a FICO score above 700 or the working-poor woman who never had a ticket - never mind an at-fault accident? This certainly seems like a no-brainer to me

In my humble opinion, instead of hurting those who can least afford it who must have auto insurance to be able to drive in order to be able to get and keep jobs is NOT as effective a tool in minimizing/discouraging claims as financial incentives of penalizing the bad drivers and keeping more of the bad actors off the roads in the first place. There are less losses overall and therefore less need for filing a claim if the cause of the problem is brought to heel.

The cause of the problem are unsafe or negligent drivers who cause accidents - regardless of their income and credit rating. I would rather be driving with more good drivers on the road who may have poor credit than with the bad drivers who are affluent and have great credit because their "700 Club" FICO score is NOT going to make them less prone to causing a loss - thus necessitating a potential claim - in the first place. What are these "experts" in the industry thinking?