CONNING STUDIES CREDIT SCORING

Auto insurers believe that including credit scores as part of a driver’s overall risk profile allows them to underwrite and price policies more efficiently, accurately and consistently, according to a recent Conning & Company study. Insurers also believe that, in some cases, a consumer’s credit rating may be more important than his/her driving record. According to the Conning study, “Insurance Scoring in Personal Automobile Insurance: Breaking the Silence,” 92 percent of respondents from the 100 largest personal automobile insurers use credit data in underwriting new business. This trend is relatively new, as over half of this group began using credit data only within the last three years. The use of credit scoring is often a highly sensitive issue. The Conning study raises the possibility of a consumer backlash and more restrictive regulation over credit if insurers fail to educate their constituents as to how and why they use credit scores in their underwriting and rate making.