The problem in this one is, Farmers, as far as I know, leaves it up to its agents to supply the FCRA Notice. I doubt many agents took it seriously. But come on, people need to get a grasp on their situation and know your credit information. Not many people I know really care about getting that FCRA notice, they know if they have good or bad credit.
Are there too many unemployed trial attorneys out there or does this company suck as bad as they say? Farmers gets you back to where you belong…..in court.
Let me get this straight.
I act responsible all my life and protect my credit rating and I get thrown in the same pot as irresposible people who spend lavishly for all the creature comforts not matter what the ramifications????
Where\’s the incentive?
It goes against Human Nature.
While I think the credit rating system unfairly penalizes many folks, I am also very tired of having people tell me that they have fabulous credit, no claims and always had continuous coverage, only to find out that their credit sucks, they\’ve had 4 accidents in the last 4 years and never paid on time. If I wanted clients to lie to me all day, I would have become a lawyer, not an insurance agent.
It is often said that credit reporting hurts many folks, but I do believe that it is uncontested that a bad credit report is a good predictor of claims. If this is true, then why shouldn\’t insurance companies be allowed to rate based on a valid metric?
Other factors, such as age, location, driving experience and prior losses are used in most states as part of the rating process, why not include one more to even better provide equitable rating.
For those who have good credit reports, their insurance is going to be less expensive (all othere things being equal). Insurance companies MUST make profits, it is the first concern of any company. Let them charge for the risk posed by the insureds.
The whole problem with using credit history is related to the average consumer\’s ability to understand how credit impacts potential claims. Data supports the correlation but the average consumer asks what an ability to pay bills has to do with an ability to drive responsibly. Without the logical correlation between the credit score and how it directly relates to claims, consumers are not going to find the practice socially acceptable.
Data also supports that individuals in certain occupations tend to have more accidents. Why aren\’t lawyers (in the top ten) charged higher rates? Why aren\’t teachers (in the lower rankings) charged less? I suspect the answer is political…
It isn\’t hard to understand why lawyers aren\’t charged more than some other group. Can you imagine the number of law suits that would fly if that happened, no matter what any studies show? Actuarial truths would have no place in a lawers world.
I just moved my office. My new landlord checked my credit. I also opened a new bank account. My credit got checked. I also bought a new cell phone for my busienss. My credit got checked.
My credit score for insurance purposes just went down the toilet for absolutely no reason. I have no late pays but my credit score sucks.
It also takes me about a half-hour to do a quote instead of the 5 minutes it used to.
There are countless other reasons why credit scoring should be eliminated. Rates should be based on past loss experience, and nothing else.
P. S. Did those people with great credit scores fare any better in New Orleans?????
NOT!
So, someone who has owned the same home 10 years, has had the same checking account for 15 years, and the same phone company for 5 years seems a lot more stable and responsible than someone moving and changing everything around. It makes perfect sense. Why should I pay more, becuase I DO have a good insurance score, because someone else with a bad one wants me to subsidize their rates? When used IN CONJUNCTION with claim free discounts, etc, it\’s perfectly fair.
Sure you think it is great. Hey, I think it is great because credit scoring gave me a better rate too. However, I also was able to avoid filing a claim because I could afford to fix some minor hail damage myself. I can also have a higher deductible because I can afford to pay the higher deductible if I have a loss.
What about the individuals that struggle to pay their bills, cannot self fund any damages, and cannot afford higher deductibles? Just because someone struggles does not mean they are not god risks.
Imagine this scenario… an indiviudal self-funds a bumper replacement when they run into the garage door. Two months later, they back into a light pole. The person again buys a new bumper. No claims are filed but this is not a person that is paying enough attention to how they drive. Six months later the same person causes a major accident and injures three people. They are not a good risk but instead of three claims, they only show one.
Why should they receive lower rates just because they can afford to pay bills on time and self-pay minor damages? I don\’t think the credit score models take into consideration personal economics and how it influences the incident of claims correlation.
I was told that garbage that a person with a low credit score would be more likely to file a fraudulent claim, because they would try to get ahead that way. I said that is not true. If you don’t have the money to repair your vehicle you dead sure can’t repair someone elses either so you will be more careful than the financially well to do. Everything you have is valuable to you and the last thing you want is to spend grocery or light bill or rent money on a car repair.
I always had a good loss ratio, and had my office in primarily a working class neighborhood. Many of these customers did not have bank accounts or credit cards but paid cash for their insurance premiums, they were good customers, but received higher rates because of no credit history, also retired persons who had their homes paid for and owed no bills and did not deal in credit had higher rates , no credit history, some of my customers who had been insured for years with Farmers and had good loss history paid higher premiums because they got laid off their jobs and got behind in some of their payments. Not Fair
Not fair to who – just to those whose credit is not great. How about those of us who have good credit, worked hard to keep good credit and who you now want to subsidize those who statistically have more losses? How about the insurance company that needs solid actuarial data on which to generate rates that are both competitive and profitable?
Credit scores, for all their emotional impact, are valid predictors of losses. All of the arguments that I hear against credit scoring are emotionally based. Let\’s get real and realize that life isn\’t, and can\’t be, \”fair\” to everyone because \”fair\” is defined to support someone\’s claim of unfairness.
And just how would I know that credit scoring is a valid predictor?? Do I take the word of the major information companies that built a \’solution\’ that would make underwriters reliant upon their databases? Do I trust the company executive who tells me that his company\’s claims analysis validated the claims of the information giants? Then why wouldn\’t he share the report? Agent, do I take your word because you wouldn\’t steer me wrong?
I\’ve been in the industry for over 30 years and along the way conducted claims analyses on the multi-state books of business that my underwriters managed. I have yet to find anyone willing to share their detailed analyses with me. I\’ve also worked for a major insurance information provider and understand how their business plan calls for embedding the company \’solutions\’ into P/C insurers automated systems. It assures their financial well-being for years to come.
I\’m not from Missouri but I think \”show me\” is appropriate in this case. Yes, it is ususally an emotional, unscientific response when detractors rip credit scoring. It is also not \’fact\’ that credit scoring is a valid predictor until I see the details. Heresay doesn\’t cut it. Can anyone point me to such documentation?
The one thing that no one mentions…..Insurance companies RAISED their BASE rate over 50% so they could give you a discount of up to 30 – 40%. So even if you get the biggest discount, you\’re still paying more!!!
Do you want to use a 30% discount in a store that just raised their rates over 50%???? I don\’t!!
There are a few independent studies out there analyzing the correlation between credit and claim risk. Two in particular have been found to be very credible. One was conducted by an actuarial group called EPIC, and the other was done by the University of Texas.
The judge did the right thing and so will the jury. For all of you who have been mislead by all the hype and rhetoric from Fair Issacs and the company execs, let me assure you, THERE IS NO DISCERNABLE CORRELATION BETWEEN CREDIT SCORING, DRIVING, AND HOME LOSSES. Have the company exec show you the non-cat loss ratios ranked by credit score and you will finally realize that it\’s just a way for the companies to unfairly discriminate against certain groups that have other legal protections. They have simply tried to circumvent this and they will crash and burn in a big, AND COSTLY, way. Anyone who doesn\’t understand this is just plain ignorant…. Doug B. (OKC)
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?
I don\’t think there suing because their credit sucks. They are suing because they feel they were not getting proper notice. The fact is that credit scoring and accident ratio\’s have a direct Correlation to each other. It there wasn\’t then credit scoring would have been thrown out years ago.
I believe the credit score was used to charge the poor suckers who had no choice but to pay it or get their vehicle confiscated. Or take the risk of being in a bad situation where you have to pay out of pocket what you don’t have for some one elses property. I have had a bad score and in the last 23 years I have had 2 accidents neither were my fault, but because I had no money extra to beat the guy to the insurance company I got zapped BIG TIME….
How is it NOT fair for the person paying for their own damages to not get a better rate? You\’re saying someone who claimed all three should pay the same as the person who only claimed 1. And, if a people with excellent credit are shown to pay for more of their own damamge, then their rate is fairly lower than those shown to not pay for their own damage. People who take more from the pot should put more in. It\’s only fair.
The point being missed here is that the information being used is, to say the least, suspect. Even the information being recorded and reported by your own insurer is fraught with errors. Been there and seen it. Try getting it corrected. Have you tried getting something corrected on your credit report? My credit report shows I lived in Pennsylvania, while working in Houston. Whew, what a commute!
As for my own credit score, it\’s been all over the board in 35 years. Ugly, when young and 3 children to feed, now in the upper range. But…. auto claims in 35 years? ZERO Accidents in 35 years? ZERO Tickets in 35 years? ONE, 1976!
As for the statistics, has anyone actually seen these statistics? Who was it that said \”Lies, Damned Lies and Statistics\”, Twain?
IF 80 TO 90% OF ALL HOME LOSSES ARE DUE TO WEATHER, WHY IS THE CREDIT SCORE DISCOUNT FOR HOMEOWNERS 36% FOR THOSE WHO HAVE THE HIGHEST CREDIT SCORES? ALSO, A MUCH GREATER PERCENTAGE OF THE FOLKS WHO HAVE THE BEST CREDIT SCORES ARE MORE AFFULENT, BETTER EDUCATED, BETTER JOBS AND MORE EXPENSIVE HOMES. ???????
I think your statistics are totally out of left field. 80-90% of homeowners losses due to weather? I think not. With all the other losses that homeowners suffer (theft, fire, vandalism, broken pipes, etc.) that percentage is way too high. Most losses are NOT weather related. As for wealthier folks having good credit scores and consequently lower premiums, there is a statistical tie between credit scores and losses.
CAT losses are the exception, for sure, but in our area we don\’t get hit by hurricanes so why should that be a concern?
It seems to me that the \”liberal\” crowd seems to think that if someone has a good credit score then there is something wrong with granting recognition of that fact. Folks with good credit scores do tend to submit fewer claims, let the premiums recognize that and stop having them subsidize the folks who submit the most claims.
I had a wind storm damage/Farmers only paid part of claim/Farmers originally designated as a CAT Claim (Catastrophic Claim)/ I acted Pro Se..to sue in Seattle Superior Court/as punishment to me for standing up to them as Pre Se in court Farmers deleted the Cat Claim designation on Insur Score C.L.U.E. files so that any insurance I got..would cost me more in rates from any insurance company as all insurance companies get a report from C.L.U.E. then they determine what rate to charge you based on the C.L.U.E. report of claims. C.L.U.E. report advises they cannot change or delete any information, all information comes from the carrier..in this case Farmers/ Farmers also removed from the C.L.U.E. report all prior years of vehicle insurance I had with them.. so now the C.L.U.E. report lists under my vehicle insurance various policies.. as a lapse in vehicle coverage..nice huh?? it\’s all true..I can prove it..
If anyone has information on Farmers Insurance with same or similiar dealings with CAT claims or change, or delete information into the C.L.U.E. insurance records, please reply to this e-mail. lindabina@comcast.net
Answering your question the Insurance Journal recently cited a report that trial lawyers are filing nine times more lawsuits now than they did in the 1950s even when the statistical factors are adjusted as to population and number of lawyers. Trial lawyers love to pick a target and go after it \”en mass\” as in breast implants, asbestos, mold, et. That\’s why trial lawyers live in such big houses, if you haven\’t noticed. The problem with credit scoring is that using the law of greater numbers is unfair to individuals. At least with the old system of tickets and accidents used for rating risk, the individuals\’ record determined their rating fate. I have had numerous customers over the years with lousy credit scores, but good driving records and no at-fault claims. I feel that having these folks pay higher rates is unfair; however, Farmers is having to compete in a very competitive market and do the best they can under the circumstances. As they explained to us agents, \”If we don\’t use credit scoring then you will loose your safest drivers with the best credit to the companies that use credit scoring because they have lower rates for them using that system.\” Farmers communicated with their agents and many of us resisted credit scoring, but in fairness to Farmers they had to compete or loose more market share when their competitors changed the rules of the game. Farmers was among the last of the companies to implement credit scoring.
You seem to answer your own question…. Farmers has the database to rate their customers accordingly (along with CLUE, etc) Farmers should offer their best, AND MOST COMPETITIVE RATES, to the clients in their database that don\’t have tickets and/or at-fault claims. They weren\’t forced to use credit, they either are doing it so they can discriminate across the board against low income groups or they\’ve been duped by all of Fair-Isaacs sales pitches, just like the sales pitches that Farmers has hounded their agents with for years. It\’s all hype and a way for the companies to accomplish some goal of theirs that none of us truly understand….
Lastly, look carefully at what you said:
You say Farmers said that you were going to loose YOUR BEST DRIVERS with \”THE BEST CREDIT SCORES\” to the competition if they didn\’t change. They\’re telling you that they do know who the best drivers are and the solution is simple\” OFFER THEM A DAMN COMPETITIVE RATE SO THE CUSTOMER IS HAPPY AND THE COMPANY CAN COMPETE! What\’s the problem???? DOUG B. OKC,OK
Not \”producing\” enough (read: Life production) new business because the renewals are falling off faster than Billy be Jingle. Besides, the cost to maintain these agencies is becoming a factor as well. Farmers used to be a big company in California but not anymore.
well once again farmers does its best to blame the agents. First agents DONT make those decisions on premium. The company does, next and most important is agents merely provide the outcome during the quoting process. Farmers, there is a special place in hell for you. And as a former agent I couldnt run from you fast enough.
For a moment, forget about credit and its alleged correlation to losses. In all of these posts, no one has touched upon strictly credit versus premium. Take a look at why credit scoring really makes sense. Generally speaking, those individuals with poor credit scores have a more difficult time paying their bills (exceptions exist of course). Insurance companies, like every other industry, loses millions of dollars to bad debt every year. Insurers are not basing credit scores off of risk of loss, but risk of not receiving premium payment. There is not an industry in our country that is not looking for ways to minimize the leak known as bad debt.
I don\’t think they lose too much to bad debt. The policy gets cancelled when the money runs out. On occasion, there is earned premium, but unless there was a loss between the time the policy renewed and subsequently cancelled (assuming those dates are not the same) then the insurer is not out any actual costs.
Look the problem with insurance is greed and arrogance. Historically insurer\’s have been pooling risks, and pay claims based on that history. Question, how do you use a flawed credit reporting system, and tell consumers that we are doing it to lower premiums. Bologna, it is a cleaner pool for the ability to pay, but the policyholder is not going to benfit, only the company. Where is the obligation as legislated in California to equally take on all comers. Please just rate the risk, not the person, and in the long run the all consumers will benefit.
Einstein – you ain\’t. You say, \”Please just rate the risk, not the person…\” Do you really think that the person is not the most significant factor when it comes to the risk? When it comes to auto insurance, the person IS the big risk! Anything that helps more clearly define how large (or small) a risk that individual is sets a more precise distribution of the premium throughout the insured base. California\’s proposition did nothing but heap more of the premium on the folks who are not having as many losses and benefit those who have greater losses.
I had a Farmers agent do a comparison on my home, auto policy recently. The rate he gave was including a life insurance policy which gave me a discount on all the policies. I stayed with my current commpany because he told me that in order for me to get a policy with Farmers he had to write the home, auto and a life policy. I didn\’t think that was legal, is I decided to stay with State Farm although the premium was higher. Why are insurance companies using this snake oil salesmen way of selling there goods. This was a newer agent.
This is something the newer Farmers agents learned from the MBA\’s in Los Angeles. They want to be just like State Farm agents and sell the entire account. It isn\’t illegal of them to demand all of your business, it\’s just not good business sense, because Farmers is so uncompetitive in all their lines, you may have the house and cars today, but not tomorrow. Farmers is a bad company and most of the public understands that. I know, we sold Farmers for many years before it tanked in 2003. I pity those fools who are starting out and Farmers is the only round in their chamber. They\’re just hungry, that\’s all. Really hungry.
You should check with an older agent. He or she would be more than happy to write the auto and home, you just won\’t the discount for having a life policy.
I have been a satisified customer for all my insurance needs from Farmers for over 50 years. I just recently noticed the changes in the company & increase in its rates. I checked several other companies for quotes on my auto\’s insurance. Wow, I am paying double of what I can get for SAME Coverage with 2 other major companies. I ask Farmers to adjust their rates, no deal, increase my deductable if you want to cut your cost they said.WOW.
I am one of the individuals that filed the suit against Farmers, and I wish I had the oportunity to talk to all of you who have written comments. It would take a long time though.
I didn’t read all of the comment, but the ones I read only mentioned auto insurance. Your credit score also determines the cost of your homeowners insurance, but our suit only involves auto insurance. You are being ripped off big time on your homeowner insurance, regardless of your insurer. You see, they can’t artificially inflate the value of your car every year,but they can on your house, and raise your premium to protect the supposed new value. Plus they charge you extra for a bad credit score.
In my case I asked my agent why my credit score wasn’t rated as an A rather than a G. When I got a copy of my credit rating I was astounded by what I found. It showed me having mortgages in the amount of over $1,000,000 (one million)on houses that I had sold years ago. When I talked to the credit rating company they told me that it is up to the mortgage companies to report closed mortgages.
They showed me owning several credit cards that I didn’t have, plus a bank account, and a $50,000 line of credit, at a bank that went out of business about 15 years earlier. A line of credit is a bad mark on your credet rating, because it has a potential for you to go into debt for that amount. The same applies to the credit limit on your credit cards.
One of the comments I read said that people with good credit scores should get lower insurance rates (by-the-way that’s Farmers line). I live in an area of about 80,000 people, and my agent told me that she only had one customer with an A rating. So much for lowering insurance rates for good drivers.
I don’t need to tell you that have a little bit of brains (excluding those arrogant few) that your mother ,dad, and grandpartents (who may not-so-well-off finanancially) are excellant drivers.
On the other-hand multimillioaire Senator Ted Kennedy only drowned one girl in his car. He only crashed one airplane. John Kennedy Jr. only killed himself and one girl in a plane crash. And one of Robert Kennedy’s boys only paralized one girl in a car crash. I read about a rich athlete crashing a car at least once a week. Being rich only means they can afford to drink scotch insead of beer.
Finally – it is wrong for a company to set your insurance rates based on a credit rating, by a third party, especially without you knowing about it or having a chance to dispute it. It’s too bad that the credit rating companies aren’t included in the suit. My guess is that no-one has a clean and accurate credit report based on my experience.
In Farmers preliminary arguments to the Federal court in Oklahoma they claimed that I and all of Farmers customers were verbally told that this was happening. I was mentiond by name, and I want to tell you that that was a big lie. Any fool would know that they didn’t tell millions of customers verbally about it. How many of you see your agent yearly? Not many I suspect.
The folks at Farmers will tell you that people with poor credit are 7 times more likely to file a fraudulent claim. Unfortunately the statistics don’t bear that out. They will, however, show that those who file fraudulent claims are 7 times more likely to have poor credit.
So, basically if everytime you come to a stop sign, you stop your car, Farmers would have you believe that everytime you stop your car, you will have come to a stop sign.
The problem in this one is, Farmers, as far as I know, leaves it up to its agents to supply the FCRA Notice. I doubt many agents took it seriously. But come on, people need to get a grasp on their situation and know your credit information. Not many people I know really care about getting that FCRA notice, they know if they have good or bad credit.
Are there too many unemployed trial attorneys out there or does this company suck as bad as they say? Farmers gets you back to where you belong…..in court.
Let me get this straight.
I act responsible all my life and protect my credit rating and I get thrown in the same pot as irresposible people who spend lavishly for all the creature comforts not matter what the ramifications????
Where\’s the incentive?
It goes against Human Nature.
While I think the credit rating system unfairly penalizes many folks, I am also very tired of having people tell me that they have fabulous credit, no claims and always had continuous coverage, only to find out that their credit sucks, they\’ve had 4 accidents in the last 4 years and never paid on time. If I wanted clients to lie to me all day, I would have become a lawyer, not an insurance agent.
It is often said that credit reporting hurts many folks, but I do believe that it is uncontested that a bad credit report is a good predictor of claims. If this is true, then why shouldn\’t insurance companies be allowed to rate based on a valid metric?
Other factors, such as age, location, driving experience and prior losses are used in most states as part of the rating process, why not include one more to even better provide equitable rating.
For those who have good credit reports, their insurance is going to be less expensive (all othere things being equal). Insurance companies MUST make profits, it is the first concern of any company. Let them charge for the risk posed by the insureds.
The whole problem with using credit history is related to the average consumer\’s ability to understand how credit impacts potential claims. Data supports the correlation but the average consumer asks what an ability to pay bills has to do with an ability to drive responsibly. Without the logical correlation between the credit score and how it directly relates to claims, consumers are not going to find the practice socially acceptable.
Data also supports that individuals in certain occupations tend to have more accidents. Why aren\’t lawyers (in the top ten) charged higher rates? Why aren\’t teachers (in the lower rankings) charged less? I suspect the answer is political…
It isn\’t hard to understand why lawyers aren\’t charged more than some other group. Can you imagine the number of law suits that would fly if that happened, no matter what any studies show? Actuarial truths would have no place in a lawers world.
I just moved my office. My new landlord checked my credit. I also opened a new bank account. My credit got checked. I also bought a new cell phone for my busienss. My credit got checked.
My credit score for insurance purposes just went down the toilet for absolutely no reason. I have no late pays but my credit score sucks.
It also takes me about a half-hour to do a quote instead of the 5 minutes it used to.
There are countless other reasons why credit scoring should be eliminated. Rates should be based on past loss experience, and nothing else.
P. S. Did those people with great credit scores fare any better in New Orleans?????
NOT!
So, someone who has owned the same home 10 years, has had the same checking account for 15 years, and the same phone company for 5 years seems a lot more stable and responsible than someone moving and changing everything around. It makes perfect sense. Why should I pay more, becuase I DO have a good insurance score, because someone else with a bad one wants me to subsidize their rates? When used IN CONJUNCTION with claim free discounts, etc, it\’s perfectly fair.
Mark – What you said
Sure you think it is great. Hey, I think it is great because credit scoring gave me a better rate too. However, I also was able to avoid filing a claim because I could afford to fix some minor hail damage myself. I can also have a higher deductible because I can afford to pay the higher deductible if I have a loss.
What about the individuals that struggle to pay their bills, cannot self fund any damages, and cannot afford higher deductibles? Just because someone struggles does not mean they are not god risks.
Imagine this scenario… an indiviudal self-funds a bumper replacement when they run into the garage door. Two months later, they back into a light pole. The person again buys a new bumper. No claims are filed but this is not a person that is paying enough attention to how they drive. Six months later the same person causes a major accident and injures three people. They are not a good risk but instead of three claims, they only show one.
Why should they receive lower rates just because they can afford to pay bills on time and self-pay minor damages? I don\’t think the credit score models take into consideration personal economics and how it influences the incident of claims correlation.
I was told that garbage that a person with a low credit score would be more likely to file a fraudulent claim, because they would try to get ahead that way. I said that is not true. If you don’t have the money to repair your vehicle you dead sure can’t repair someone elses either so you will be more careful than the financially well to do. Everything you have is valuable to you and the last thing you want is to spend grocery or light bill or rent money on a car repair.
I always had a good loss ratio, and had my office in primarily a working class neighborhood. Many of these customers did not have bank accounts or credit cards but paid cash for their insurance premiums, they were good customers, but received higher rates because of no credit history, also retired persons who had their homes paid for and owed no bills and did not deal in credit had higher rates , no credit history, some of my customers who had been insured for years with Farmers and had good loss history paid higher premiums because they got laid off their jobs and got behind in some of their payments. Not Fair
Not fair to who – just to those whose credit is not great. How about those of us who have good credit, worked hard to keep good credit and who you now want to subsidize those who statistically have more losses? How about the insurance company that needs solid actuarial data on which to generate rates that are both competitive and profitable?
Credit scores, for all their emotional impact, are valid predictors of losses. All of the arguments that I hear against credit scoring are emotionally based. Let\’s get real and realize that life isn\’t, and can\’t be, \”fair\” to everyone because \”fair\” is defined to support someone\’s claim of unfairness.
And just how would I know that credit scoring is a valid predictor?? Do I take the word of the major information companies that built a \’solution\’ that would make underwriters reliant upon their databases? Do I trust the company executive who tells me that his company\’s claims analysis validated the claims of the information giants? Then why wouldn\’t he share the report? Agent, do I take your word because you wouldn\’t steer me wrong?
I\’ve been in the industry for over 30 years and along the way conducted claims analyses on the multi-state books of business that my underwriters managed. I have yet to find anyone willing to share their detailed analyses with me. I\’ve also worked for a major insurance information provider and understand how their business plan calls for embedding the company \’solutions\’ into P/C insurers automated systems. It assures their financial well-being for years to come.
I\’m not from Missouri but I think \”show me\” is appropriate in this case. Yes, it is ususally an emotional, unscientific response when detractors rip credit scoring. It is also not \’fact\’ that credit scoring is a valid predictor until I see the details. Heresay doesn\’t cut it. Can anyone point me to such documentation?
The one thing that no one mentions…..Insurance companies RAISED their BASE rate over 50% so they could give you a discount of up to 30 – 40%. So even if you get the biggest discount, you\’re still paying more!!!
Do you want to use a 30% discount in a store that just raised their rates over 50%???? I don\’t!!
Hey Rick…
There are a few independent studies out there analyzing the correlation between credit and claim risk. Two in particular have been found to be very credible. One was conducted by an actuarial group called EPIC, and the other was done by the University of Texas.
Thanks Guru, I\’ll do a little research.
The judge did the right thing and so will the jury. For all of you who have been mislead by all the hype and rhetoric from Fair Issacs and the company execs, let me assure you, THERE IS NO DISCERNABLE CORRELATION BETWEEN CREDIT SCORING, DRIVING, AND HOME LOSSES. Have the company exec show you the non-cat loss ratios ranked by credit score and you will finally realize that it\’s just a way for the companies to unfairly discriminate against certain groups that have other legal protections. They have simply tried to circumvent this and they will crash and burn in a big, AND COSTLY, way. Anyone who doesn\’t understand this is just plain ignorant…. Doug B. (OKC)
I like the online credit score calculator at
http://www.moneyforums.co.uk/credit_score_calculator.php
It allows me to play around with the various options so
that I can figure out what to do or say to up my credit
score rating, very useful :)
Cheers !
Joanne.
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?
I don\’t think there suing because their credit sucks. They are suing because they feel they were not getting proper notice. The fact is that credit scoring and accident ratio\’s have a direct Correlation to each other. It there wasn\’t then credit scoring would have been thrown out years ago.
I believe the credit score was used to charge the poor suckers who had no choice but to pay it or get their vehicle confiscated. Or take the risk of being in a bad situation where you have to pay out of pocket what you don’t have for some one elses property. I have had a bad score and in the last 23 years I have had 2 accidents neither were my fault, but because I had no money extra to beat the guy to the insurance company I got zapped BIG TIME….
Credit use has been thrown out and prohibited from being used in over a dozen \”consumer protection conscious\” States. More will follow.
Scooby\’s-
How is it NOT fair for the person paying for their own damages to not get a better rate? You\’re saying someone who claimed all three should pay the same as the person who only claimed 1. And, if a people with excellent credit are shown to pay for more of their own damamge, then their rate is fairly lower than those shown to not pay for their own damage. People who take more from the pot should put more in. It\’s only fair.
The point being missed here is that the information being used is, to say the least, suspect. Even the information being recorded and reported by your own insurer is fraught with errors. Been there and seen it. Try getting it corrected. Have you tried getting something corrected on your credit report? My credit report shows I lived in Pennsylvania, while working in Houston. Whew, what a commute!
As for my own credit score, it\’s been all over the board in 35 years. Ugly, when young and 3 children to feed, now in the upper range. But…. auto claims in 35 years? ZERO Accidents in 35 years? ZERO Tickets in 35 years? ONE, 1976!
As for the statistics, has anyone actually seen these statistics? Who was it that said \”Lies, Damned Lies and Statistics\”, Twain?
The problem is really the data being used
IF 80 TO 90% OF ALL HOME LOSSES ARE DUE TO WEATHER, WHY IS THE CREDIT SCORE DISCOUNT FOR HOMEOWNERS 36% FOR THOSE WHO HAVE THE HIGHEST CREDIT SCORES? ALSO, A MUCH GREATER PERCENTAGE OF THE FOLKS WHO HAVE THE BEST CREDIT SCORES ARE MORE AFFULENT, BETTER EDUCATED, BETTER JOBS AND MORE EXPENSIVE HOMES. ???????
I think your statistics are totally out of left field. 80-90% of homeowners losses due to weather? I think not. With all the other losses that homeowners suffer (theft, fire, vandalism, broken pipes, etc.) that percentage is way too high. Most losses are NOT weather related. As for wealthier folks having good credit scores and consequently lower premiums, there is a statistical tie between credit scores and losses.
CAT losses are the exception, for sure, but in our area we don\’t get hit by hurricanes so why should that be a concern?
It seems to me that the \”liberal\” crowd seems to think that if someone has a good credit score then there is something wrong with granting recognition of that fact. Folks with good credit scores do tend to submit fewer claims, let the premiums recognize that and stop having them subsidize the folks who submit the most claims.
I had a wind storm damage/Farmers only paid part of claim/Farmers originally designated as a CAT Claim (Catastrophic Claim)/ I acted Pro Se..to sue in Seattle Superior Court/as punishment to me for standing up to them as Pre Se in court Farmers deleted the Cat Claim designation on Insur Score C.L.U.E. files so that any insurance I got..would cost me more in rates from any insurance company as all insurance companies get a report from C.L.U.E. then they determine what rate to charge you based on the C.L.U.E. report of claims. C.L.U.E. report advises they cannot change or delete any information, all information comes from the carrier..in this case Farmers/ Farmers also removed from the C.L.U.E. report all prior years of vehicle insurance I had with them.. so now the C.L.U.E. report lists under my vehicle insurance various policies.. as a lapse in vehicle coverage..nice huh?? it\’s all true..I can prove it..
If anyone has information on Farmers Insurance with same or similiar dealings with CAT claims or change, or delete information into the C.L.U.E. insurance records, please reply to this e-mail.
lindabina@comcast.net
Answering your question the Insurance Journal recently cited a report that trial lawyers are filing nine times more lawsuits now than they did in the 1950s even when the statistical factors are adjusted as to population and number of lawyers. Trial lawyers love to pick a target and go after it \”en mass\” as in breast implants, asbestos, mold, et. That\’s why trial lawyers live in such big houses, if you haven\’t noticed. The problem with credit scoring is that using the law of greater numbers is unfair to individuals. At least with the old system of tickets and accidents used for rating risk, the individuals\’ record determined their rating fate. I have had numerous customers over the years with lousy credit scores, but good driving records and no at-fault claims. I feel that having these folks pay higher rates is unfair; however, Farmers is having to compete in a very competitive market and do the best they can under the circumstances. As they explained to us agents, \”If we don\’t use credit scoring then you will loose your safest drivers with the best credit to the companies that use credit scoring because they have lower rates for them using that system.\” Farmers communicated with their agents and many of us resisted credit scoring, but in fairness to Farmers they had to compete or loose more market share when their competitors changed the rules of the game. Farmers was among the last of the companies to implement credit scoring.
You seem to answer your own question…. Farmers has the database to rate their customers accordingly (along with CLUE, etc) Farmers should offer their best, AND MOST COMPETITIVE RATES, to the clients in their database that don\’t have tickets and/or at-fault claims. They weren\’t forced to use credit, they either are doing it so they can discriminate across the board against low income groups or they\’ve been duped by all of Fair-Isaacs sales pitches, just like the sales pitches that Farmers has hounded their agents with for years. It\’s all hype and a way for the companies to accomplish some goal of theirs that none of us truly understand….
Lastly, look carefully at what you said:
You say Farmers said that you were going to loose YOUR BEST DRIVERS with \”THE BEST CREDIT SCORES\” to the competition if they didn\’t change. They\’re telling you that they do know who the best drivers are and the solution is simple\” OFFER THEM A DAMN COMPETITIVE RATE SO THE CUSTOMER IS HAPPY AND THE COMPANY CAN COMPETE! What\’s the problem???? DOUG B. OKC,OK
Not \”producing\” enough (read: Life production) new business because the renewals are falling off faster than Billy be Jingle. Besides, the cost to maintain these agencies is becoming a factor as well. Farmers used to be a big company in California but not anymore.
well once again farmers does its best to blame the agents. First agents DONT make those decisions on premium. The company does, next and most important is agents merely provide the outcome during the quoting process. Farmers, there is a special place in hell for you. And as a former agent I couldnt run from you fast enough.
For a moment, forget about credit and its alleged correlation to losses. In all of these posts, no one has touched upon strictly credit versus premium. Take a look at why credit scoring really makes sense. Generally speaking, those individuals with poor credit scores have a more difficult time paying their bills (exceptions exist of course). Insurance companies, like every other industry, loses millions of dollars to bad debt every year. Insurers are not basing credit scores off of risk of loss, but risk of not receiving premium payment. There is not an industry in our country that is not looking for ways to minimize the leak known as bad debt.
I don\’t think they lose too much to bad debt. The policy gets cancelled when the money runs out. On occasion, there is earned premium, but unless there was a loss between the time the policy renewed and subsequently cancelled (assuming those dates are not the same) then the insurer is not out any actual costs.
Look the problem with insurance is greed and arrogance. Historically insurer\’s have been pooling risks, and pay claims based on that history. Question, how do you use a flawed credit reporting system, and tell consumers that we are doing it to lower premiums. Bologna, it is a cleaner pool for the ability to pay, but the policyholder is not going to benfit, only the company. Where is the obligation as legislated in California to equally take on all comers. Please just rate the risk, not the person, and in the long run the all consumers will benefit.
Einstein – you ain\’t. You say, \”Please just rate the risk, not the person…\” Do you really think that the person is not the most significant factor when it comes to the risk? When it comes to auto insurance, the person IS the big risk! Anything that helps more clearly define how large (or small) a risk that individual is sets a more precise distribution of the premium throughout the insured base. California\’s proposition did nothing but heap more of the premium on the folks who are not having as many losses and benefit those who have greater losses.
I had a Farmers agent do a comparison on my home, auto policy recently. The rate he gave was including a life insurance policy which gave me a discount on all the policies. I stayed with my current commpany because he told me that in order for me to get a policy with Farmers he had to write the home, auto and a life policy. I didn\’t think that was legal, is I decided to stay with State Farm although the premium was higher. Why are insurance companies using this snake oil salesmen way of selling there goods. This was a newer agent.
This is something the newer Farmers agents learned from the MBA\’s in Los Angeles. They want to be just like State Farm agents and sell the entire account. It isn\’t illegal of them to demand all of your business, it\’s just not good business sense, because Farmers is so uncompetitive in all their lines, you may have the house and cars today, but not tomorrow. Farmers is a bad company and most of the public understands that. I know, we sold Farmers for many years before it tanked in 2003. I pity those fools who are starting out and Farmers is the only round in their chamber. They\’re just hungry, that\’s all. Really hungry.
You should check with an older agent. He or she would be more than happy to write the auto and home, you just won\’t the discount for having a life policy.
I have been a satisified customer for all my insurance needs from Farmers for over 50 years. I just recently noticed the changes in the company & increase in its rates. I checked several other companies for quotes on my auto\’s insurance. Wow, I am paying double of what I can get for SAME Coverage with 2 other major companies. I ask Farmers to adjust their rates, no deal, increase my deductable if you want to cut your cost they said.WOW.
I am one of the individuals that filed the suit against Farmers, and I wish I had the oportunity to talk to all of you who have written comments. It would take a long time though.
I didn’t read all of the comment, but the ones I read only mentioned auto insurance. Your credit score also determines the cost of your homeowners insurance, but our suit only involves auto insurance. You are being ripped off big time on your homeowner insurance, regardless of your insurer. You see, they can’t artificially inflate the value of your car every year,but they can on your house, and raise your premium to protect the supposed new value. Plus they charge you extra for a bad credit score.
In my case I asked my agent why my credit score wasn’t rated as an A rather than a G. When I got a copy of my credit rating I was astounded by what I found. It showed me having mortgages in the amount of over $1,000,000 (one million)on houses that I had sold years ago. When I talked to the credit rating company they told me that it is up to the mortgage companies to report closed mortgages.
They showed me owning several credit cards that I didn’t have, plus a bank account, and a $50,000 line of credit, at a bank that went out of business about 15 years earlier. A line of credit is a bad mark on your credet rating, because it has a potential for you to go into debt for that amount. The same applies to the credit limit on your credit cards.
One of the comments I read said that people with good credit scores should get lower insurance rates (by-the-way that’s Farmers line). I live in an area of about 80,000 people, and my agent told me that she only had one customer with an A rating. So much for lowering insurance rates for good drivers.
I don’t need to tell you that have a little bit of brains (excluding those arrogant few) that your mother ,dad, and grandpartents (who may not-so-well-off finanancially) are excellant drivers.
On the other-hand multimillioaire Senator Ted Kennedy only drowned one girl in his car. He only crashed one airplane. John Kennedy Jr. only killed himself and one girl in a plane crash. And one of Robert Kennedy’s boys only paralized one girl in a car crash. I read about a rich athlete crashing a car at least once a week. Being rich only means they can afford to drink scotch insead of beer.
Finally – it is wrong for a company to set your insurance rates based on a credit rating, by a third party, especially without you knowing about it or having a chance to dispute it. It’s too bad that the credit rating companies aren’t included in the suit. My guess is that no-one has a clean and accurate credit report based on my experience.
In Farmers preliminary arguments to the Federal court in Oklahoma they claimed that I and all of Farmers customers were verbally told that this was happening. I was mentiond by name, and I want to tell you that that was a big lie. Any fool would know that they didn’t tell millions of customers verbally about it. How many of you see your agent yearly? Not many I suspect.
The folks at Farmers will tell you that people with poor credit are 7 times more likely to file a fraudulent claim. Unfortunately the statistics don’t bear that out. They will, however, show that those who file fraudulent claims are 7 times more likely to have poor credit.
So, basically if everytime you come to a stop sign, you stop your car, Farmers would have you believe that everytime you stop your car, you will have come to a stop sign.