Tried this move in Oregon several years ago and the insurance companies launched a massive advertizing campaign claiming passage would cause everyones rates to increase. They succeeded and the measure failed. 10% unemployement and the highest rates go to those that can least afford it. Best competitive place for auto insurance is Ca. where they have NO credit scoring.
I say research left handed folks and right handed folks and whoever has the highest loss ratio should pay the highest premium. And folks that are ambidextrous should be charged points. If you don’t like that underwriting then I can go to eye color. Blue, Green, Hazel, Brown, who has the highest loss ratio?
You can underwrite any way you want. I once had to tell a US Congressman that he didn’t qualify for a homeowners policy with the “Good Hands” company because of his credit score, oops, I mean his insurance score.
Most discounts relate to stability/responsibilty factors – age, married, homeownership, etc. Credit is one of those. There are always exceptions to the rule but as a whole it is valuable. I have seen loss ratios directly linked to loss ratio. The lower the score the higher the loss ratio. So why would that not make sense. Is it fair to make those insured’s pay higher premiums who act and live responsibly for those that do not. You take on a credit obigation you pay it. Your roof needs to be replaced you replace it. You need to be at work at 8 you leave early and drive responsibly there. Or you pay your bills late, wait until the roof leaks, or drive like a bat out of hell to work because your late. Life rewards those who reward themselves
Absolute: I think your absolutely off base with your comments. Low credit scores and the behaviors you have described are two different things. I happen to be one that is in the process of trying to improve my credit score. Once you get in that hole it takes years to build it back up again.
I have to say when I had more cash and a better credit score I was driving 40,000 miles a year. Now I drive 3,000 miles a year. Guess what I pay more for my auto insurance now. Why because of my current credit score. I didn’t get any ticket or accidents. Last ticket was 30 years ago, last accident was 20 years ago. So explain to me why I have to pay 33% higher premium when I am driving 92% less?
My insurance agent has appealed with no result and is right out appalled by the credit score process. Sounds to me like the only one’s rewarding themselves is the insurance company.
I am an agent and it’s very frustrating to tell someone with bad credit that they will have to pay a higher rate. Some of these people, have had zero violation or claims in 40 years! It’s truly disgusting but this falls under the same line as charging youths more because of their peer’s bad driving habits.
I am personally against credit scoring for insurance purposes but it use* to be a reliable statistic. Nowadays, it’s not uncommon to find someone with a little more debt then they can handle.
To confirm this observation, I’ve talked to a few product managers who are reporting that the actuary importance of credit is becoming less and less accurate. I suspect, gadgets like the Progressive “snapshot” device and others will be used to offset this blurry rating variable although I could be wrong.
You are still getting a lower rate for not having an accident or a ticket compared to if you had a ticket or accident. You should also be getting a lower rate for driving less miles one way and your annual miles. Each companies determines thier own credit model. So if your ding is credit – shop it. I represent many companies that look at different factors and some to not weigh so heavy on the credit. I am not trying to be insensitive but you dug the hole -sounds like you stopped digging and you are filling it in – It will get better and so will your rate.
First – Insurance Scoring has proven itself to be a statistically compelling predictor of claims performance – FOR GROUPS of insureds. Looking at the numbers, it is easy to see a clear delineation of loss experience between varying levels of score. This is an actuarially sound way to make rates. People who fit into a group that has better loss experience pay less – and vice-versa.
Second – this creates the issue of individual applicability of insurance score. We have all heard of that grandmother – with no claims and excellent driving habits – who has never had a credit card and thus a poor insurance score. Is it fair to her to make her pay more for something that is not her fault???
Finally, insurance is a competitive business, especially auto insurance. Insured premiums pay 100% of all carriers losses and expenses and will do so in any proposed schema. If the agents proposal – (to use an approach that appears to them to be more fair even if less actuarially sound) – is used then rates will adjust up and down to equal the same net to the carriers. Some will pay less, some will pay more. The agents in the peoples republic of Massachusetts would complain about that too …..
I think you guys are really of base. I’ve worked in underwriting, service, sales, management; and now, I’m an agency owner. I can only speak for the bigs ones that I’ve worked for.
When a company uses insurance score, occupation, education, or any other “underwriting factor”, they are looking at statistics. Do you guys think they pull this crap out of the air? Get real.
Each insurance company is presented with relatively the same data. How each company uses it, is a different story. The good hands guy interprets that data differently than, the gecko. (I’ve worked for both companies.)
With that being said, if a company uses occupational underwriting in their core philosophy, let them. If a company uses insurance score primarily, let them. The rates tell the TRUE story. If a company wants an individual piece of business, they’ll score price it accordingly.
To solve your problem, just go to an independent agent that offers a ton of markets like my agency.
Tried this move in Oregon several years ago and the insurance companies launched a massive advertizing campaign claiming passage would cause everyones rates to increase. They succeeded and the measure failed. 10% unemployement and the highest rates go to those that can least afford it. Best competitive place for auto insurance is Ca. where they have NO credit scoring.
I say research left handed folks and right handed folks and whoever has the highest loss ratio should pay the highest premium. And folks that are ambidextrous should be charged points. If you don’t like that underwriting then I can go to eye color. Blue, Green, Hazel, Brown, who has the highest loss ratio?
You can underwrite any way you want. I once had to tell a US Congressman that he didn’t qualify for a homeowners policy with the “Good Hands” company because of his credit score, oops, I mean his insurance score.
Say what you want about credit as an underwriting tool to come up with premium, it should never EVER be used for eligibility.
This needs to be done in Jersey! Scoring is Redlining, pure and simple!
Most discounts relate to stability/responsibilty factors – age, married, homeownership, etc. Credit is one of those. There are always exceptions to the rule but as a whole it is valuable. I have seen loss ratios directly linked to loss ratio. The lower the score the higher the loss ratio. So why would that not make sense. Is it fair to make those insured’s pay higher premiums who act and live responsibly for those that do not. You take on a credit obigation you pay it. Your roof needs to be replaced you replace it. You need to be at work at 8 you leave early and drive responsibly there. Or you pay your bills late, wait until the roof leaks, or drive like a bat out of hell to work because your late. Life rewards those who reward themselves
Absolute: I think your absolutely off base with your comments. Low credit scores and the behaviors you have described are two different things. I happen to be one that is in the process of trying to improve my credit score. Once you get in that hole it takes years to build it back up again.
I have to say when I had more cash and a better credit score I was driving 40,000 miles a year. Now I drive 3,000 miles a year. Guess what I pay more for my auto insurance now. Why because of my current credit score. I didn’t get any ticket or accidents. Last ticket was 30 years ago, last accident was 20 years ago. So explain to me why I have to pay 33% higher premium when I am driving 92% less?
My insurance agent has appealed with no result and is right out appalled by the credit score process. Sounds to me like the only one’s rewarding themselves is the insurance company.
I am an agent and it’s very frustrating to tell someone with bad credit that they will have to pay a higher rate. Some of these people, have had zero violation or claims in 40 years! It’s truly disgusting but this falls under the same line as charging youths more because of their peer’s bad driving habits.
I am personally against credit scoring for insurance purposes but it use* to be a reliable statistic. Nowadays, it’s not uncommon to find someone with a little more debt then they can handle.
To confirm this observation, I’ve talked to a few product managers who are reporting that the actuary importance of credit is becoming less and less accurate. I suspect, gadgets like the Progressive “snapshot” device and others will be used to offset this blurry rating variable although I could be wrong.
You are still getting a lower rate for not having an accident or a ticket compared to if you had a ticket or accident. You should also be getting a lower rate for driving less miles one way and your annual miles. Each companies determines thier own credit model. So if your ding is credit – shop it. I represent many companies that look at different factors and some to not weigh so heavy on the credit. I am not trying to be insensitive but you dug the hole -sounds like you stopped digging and you are filling it in – It will get better and so will your rate.
Three issues in play here:
First – Insurance Scoring has proven itself to be a statistically compelling predictor of claims performance – FOR GROUPS of insureds. Looking at the numbers, it is easy to see a clear delineation of loss experience between varying levels of score. This is an actuarially sound way to make rates. People who fit into a group that has better loss experience pay less – and vice-versa.
Second – this creates the issue of individual applicability of insurance score. We have all heard of that grandmother – with no claims and excellent driving habits – who has never had a credit card and thus a poor insurance score. Is it fair to her to make her pay more for something that is not her fault???
Finally, insurance is a competitive business, especially auto insurance. Insured premiums pay 100% of all carriers losses and expenses and will do so in any proposed schema. If the agents proposal – (to use an approach that appears to them to be more fair even if less actuarially sound) – is used then rates will adjust up and down to equal the same net to the carriers. Some will pay less, some will pay more. The agents in the peoples republic of Massachusetts would complain about that too …..
Then why is marital status an underwriting variable? I don’t like that one either.
I think you guys are really of base. I’ve worked in underwriting, service, sales, management; and now, I’m an agency owner. I can only speak for the bigs ones that I’ve worked for.
When a company uses insurance score, occupation, education, or any other “underwriting factor”, they are looking at statistics. Do you guys think they pull this crap out of the air? Get real.
Each insurance company is presented with relatively the same data. How each company uses it, is a different story. The good hands guy interprets that data differently than, the gecko. (I’ve worked for both companies.)
With that being said, if a company uses occupational underwriting in their core philosophy, let them. If a company uses insurance score primarily, let them. The rates tell the TRUE story. If a company wants an individual piece of business, they’ll score price it accordingly.
To solve your problem, just go to an independent agent that offers a ton of markets like my agency.
David Berry
http://www.txinsurancepro.com/dallas-business-insurance/