Talk about selling refrigerators to Eskimos, Richard Stockes is a super salesman. Credit histories, as used by insurers, raise not lower rates and in some cases cancellation of people who never filed a claim. It’s just cheap underwriting, something that can be done off shore at reduced cost. They use the combined scores of 3 credit companies, which gives you an average. Score below that majic number (650) and you are not renewed, not written or charged increased premiums. Trying to get the record corrected takes months or years. What is the insurance industry going to do when ChoicePoint had 144,000 policy holders credit stolen? Are these people going to be refused insurance? The fourth paragraft is just not true. Your credit score takes into account; salary, disability, occuption, employment and bil paying to name a few.
If you are an agent or Broker, care about your clients and future of your business you will support banning credit score use. Remember, the same people who support this also sell or give your clients names to ChoicePoint and the 3 credit companies.
1. The use of credit information can best be described as being cost neutral across the market. Those with better scores are likely to get better rates, and those with worse scores worse rates.
2. Typically, insurers only use credit for initial underwriting, not renewals.
3. The credit score used by insurers is different from the one used for other purposes. A company called Fair Isaac (www.fairisaac.com) runs an analysis which removes much of the information and generates a different kind of number. In many cases, it’s all done by computers and the sales person never sees anything at all about your credit… it just gets factored in along with everything else.
The goal is to undewrite based on an accurate indicator of financial responibility, which has proved to be an excellent predictor of claims costs.
While there may always be problems with bad data in credit reports, the same holds true of motor vehicle records and claims histories. I think consumers are developing an increased awareness of the many reasons to monitor their credit.
From a social policy standpoint, I think anything that encourages people to improve their credit is a good thing.
I have good credit, and I hope insurers continue to use it.
Talk about selling refrigerators to Eskimos, Richard Stockes is a super salesman. Credit histories, as used by insurers, raise not lower rates and in some cases cancellation of people who never filed a claim. It’s just cheap underwriting, something that can be done off shore at reduced cost. They use the combined scores of 3 credit companies, which gives you an average. Score below that majic number (650) and you are not renewed, not written or charged increased premiums. Trying to get the record corrected takes months or years. What is the insurance industry going to do when ChoicePoint had 144,000 policy holders credit stolen? Are these people going to be refused insurance? The fourth paragraft is just not true. Your credit score takes into account; salary, disability, occuption, employment and bil paying to name a few.
If you are an agent or Broker, care about your clients and future of your business you will support banning credit score use. Remember, the same people who support this also sell or give your clients names to ChoicePoint and the 3 credit companies.
There are several misconceptions in your post:
1. The use of credit information can best be described as being cost neutral across the market. Those with better scores are likely to get better rates, and those with worse scores worse rates.
2. Typically, insurers only use credit for initial underwriting, not renewals.
3. The credit score used by insurers is different from the one used for other purposes. A company called Fair Isaac (www.fairisaac.com) runs an analysis which removes much of the information and generates a different kind of number. In many cases, it’s all done by computers and the sales person never sees anything at all about your credit… it just gets factored in along with everything else.
The goal is to undewrite based on an accurate indicator of financial responibility, which has proved to be an excellent predictor of claims costs.
While there may always be problems with bad data in credit reports, the same holds true of motor vehicle records and claims histories. I think consumers are developing an increased awareness of the many reasons to monitor their credit.
From a social policy standpoint, I think anything that encourages people to improve their credit is a good thing.
I have good credit, and I hope insurers continue to use it.