Is there an ulterior motive here with MA insurance agents trying to keep competiton out of the state by banning use of credit scores? I’m sure this type of ban is what makes MA a tough state to do insurance business in….
theres much more to it than that, my agency is in a blue collar area, many of my clients would be hurt by such practices as they already strugle to keep up. Its just bad public policy.
@Peter Kay. I think you are correct on this one. Agents in Massachusetts are banding together to try and get the direct writers and others to leave the state. That is bad for consumers. Less choice = higher prices.
Either ‘credit profiling’ has a direct cause and effect with claim potential or it does not. I have been asking for years “where is the research?”, not studies or surveys. Real scientific research done by an independent non-biased (non-interested) research facility for a period of many years. Anybody? And please don’t refer me to the old ‘Texas studies’ because they were studies and not valid research condcted over a period of years. So does credit profiling work? It appears to work, but I want to examine real research before making a decision.
The facts are undisputable on this issue: credit rating is closely coorelated with auto accidents. As a society, we may not want to take advantage of this relationship, but the relationship exists none the less. The DECISION to use credit scoring in insurance pricing is a reasonable place for debate. The EXISTENCE of a relationship between credit score and insurance claims is already resolved.
Insurance is a game of predictable risks. We should use every means at our disposal to calculate and assign the costs where it belongs. If it is not assigned to the higher risk individuals, it will be divided among us all. Rates for all will go up to counterbalance the increased risk assumption, since it cannot be charged to individuals.
Insurance is a game of balancing risks. We should use every means available to calculate these and assign costs accordingly. If we are not allowed to do so, then rates will go up for all to accomodate the increase in risk no longer assignable to the individuals directly responsible.
Sorry. I missed the date when credit profiling became ‘resolved’ and ‘undisputed’. Thanks for the concrete evidence of your opinions. That sure was some great reading. By the way, what entity did the research which proved the theory and maintains it is now undisputed? I missed the name in the replies.
How about every loss analysis done by every insurance company in the country? I swear, asserting that there’s no correlation is like poking one’s own eyes out and claiming it’s dark outside!
Hey Dar… FAIR ISAAC’S did the study if you must know (look it up). If people have to put food on the table vs. getting their car serviced what do you think is going to get done. Come on!!!
Fair Isaac is making money off of selling their computer modeling to Insurance companies – so there are more than a few questions as to not only the objective basis of the evidence that was dug up but how close the correlation might be not only in incidence but severity of any potential underwriting losses – particularly when many companies have made credit based scoring more than 50% of their premium variance and some as high as 90% of variance. Fair Isaac research may be no more than another cottage industry scam just like Bernie Madoff’s portfolio rate of return or computer hardware marketing using Y2K scare tactics. There is probably a grain of truth involved but it has to do more with credit scoring reflecting that some folks regularly pay their bills & the insurance company would rather deal with them than those who do not versus any correlation to accidents or claims.
On a side note, I noticed that they were also looking to take out other socio-economic factors such as education & occupation.
If I recall correctly occupation does have something of an impact on loss risk. As an example, doctors and nurses have a fairly high loss chance due to either being on call (ie ER or OB/GYN docs) or having been on duty for multiple shifts.
I had an ins. co. in calif. who would not insure anyone who worked the 2nd shift because they where driving home when people where leaveing the bars. The insurance company claim to have a study to prove they where correct.
If using credit score us unfair, bad public policy, not predictive, etc, then why hasn’t a company stepped up with a non-credit based product, advertised it to the public, and written a mountain of profitable business. Certainly the masses that dislike the use of credit-based pricing would like to do business with a company that uses this “consumer friendly” approach. I believe the fact that this hasn’t happened shows that credit does have a predictive quality.
So if companies can’t use characteristics to distribute higher prices to higher risks they will raise the price for everyone. Direct writers will pre screen offers/solicitations to better risks…. agents will lose.
If they can’t base premium on credit score, can’t they still base eligibility on credit score? EX. Credit score <660 you don't qualify for coverage with Company A.
The result of this would be that the standard carriers will no longer offer coverage at all to poor credit clients. The higher credit customers will still have their choice of carriers; the lower credit scores (i.e. lower income) will have less choice and therefore higher premiums.
Seems this could backfire and hurt the people it is intended to help. Imagine that, government intervention backfiring. Say it ain't so.
Well, in my state, it is unlawful to deny coverage due to a poor insurance score.
The government needs to keep its mits out of business. Look what happened when the fed told banks how much they could charge merchents. Now BoA is considering charging a $5 debit card fee a month. Will merchents lower their prices now that they don’t have to pay as much to CC companies? Don’t hold your breath.
I don’t believe it is illegal in Florida to deny coverage. If it falls below a certain tier, you won’t get a quote. Met Life is an example of this.
As for the debit fees, blame Dick Durbin for that one. I bank with Suntrust and they are already adding the $5 fee on.
I seriously doubt that restaurants are going to write a check to print new menus so they can lower the price of an entree from $12.99 to 12.45. But that’s what morons like Dick Durbin think. Career politicians have to go.
I think that the politicians that pass this legislative rubbish are either 1. Too naivie to realise what will REALLY happen when they pass this sort of crap; or 2. Don’t care what the outcome is, because they are just trying to get political points from the voters that don’t realise (aka, don’t think about the consequences of these laws entail) what really happens when laws restricting the free market will do.
Didn’t the fed do something similar with airline fees? Didn’t they tell airlines that they couldn’t charge a certain amount for certain fees? Did ticket prices go down? Not that I saw. Moreover, many airlines now charge you on how heavy your luggage is.
If you limit how a company does business too much, they will either 1. Move overseas; 2. Increase fees, the cost of their goods/services, ect ; 3. Close up shop.
I don’t understand why anyone would pay a fee to use a debit card when by doing so you are saving the bank money. BOA and Suntrust customers should request the charge be waived or move their accounts. If enough people move their accounts, and let the banks know why, the banks will drop the fees.
Sorry about the confusion. I am not looking for a ‘study’. What I would like to read is the research that was carried out over years (5, 10, 15 or 20)which yielded the data that proves credit profile/score influences/affects loss potential in any way, shape, or form. That’s all. Looking at 10,000 claims and finding a ‘common link’ or ‘common denominator’ is a study and you can prove anything you want using this method. Real research takes years and is not out to prove anything. The data reveals the truth. So please, just the name of one entity that has conducted real research. Thank you.
Useing credit score has no bearing on if you are a good or bad driver. It is a means to increase premium. Nevada auto insurance rates using the same demographics is 30 to 35% higher then california. Californis does not allow credit scoreing. California also has an elected insurance commissioner voted in by the consumer, not politcal PLUM giving to the insurance industry thanking them for their PAC MONEY. I also owned at one time 13 auto insurance offices in 3 states, CA. ID.& WA. BECAUSE WE HAD CONTINGENCY CONTRACTS WITH THE COMPANIES WE WHERE VERY CONCERN ABOUT OUR LOSS RATIO. OUR LOSS’S HAD NOTHING TO DO WITH CREDIT SCOREING. When the insurance companies would show us our loss ratio they would add an inflated “OBNR” THE following year it would be subtracted if no loss’s occured. The credit rateing industry has taken control of our lives, employment, insurace,etc.
Oh yes, Cali should be the benchmark for insurance. This coming from the same state that bans giving a prior insurance discount because its “not fair to charge a higher rate to someone who is currently uninsured”.
A credit score can shed some light on how responsible someone is. Now, just because you have a bad credit score does not mean you are not responsible. With this cruddy economy, many good, responsible peoples’ credit scores have suffered. But I’d venture to say there are not many people who are irresponsible but have a great insurance score. (BTW, credit scoring isn’t the only thing compaines look at when they determine an insurance score).
Is there an ulterior motive here with MA insurance agents trying to keep competiton out of the state by banning use of credit scores? I’m sure this type of ban is what makes MA a tough state to do insurance business in….
theres much more to it than that, my agency is in a blue collar area, many of my clients would be hurt by such practices as they already strugle to keep up. Its just bad public policy.
@Peter Kay. I think you are correct on this one. Agents in Massachusetts are banding together to try and get the direct writers and others to leave the state. That is bad for consumers. Less choice = higher prices.
Either ‘credit profiling’ has a direct cause and effect with claim potential or it does not. I have been asking for years “where is the research?”, not studies or surveys. Real scientific research done by an independent non-biased (non-interested) research facility for a period of many years. Anybody? And please don’t refer me to the old ‘Texas studies’ because they were studies and not valid research condcted over a period of years. So does credit profiling work? It appears to work, but I want to examine real research before making a decision.
If studies are not acceptable to you, then what would you define as research?
I do agree with you that surveys are rubbish, thou.
The facts are undisputable on this issue: credit rating is closely coorelated with auto accidents. As a society, we may not want to take advantage of this relationship, but the relationship exists none the less. The DECISION to use credit scoring in insurance pricing is a reasonable place for debate. The EXISTENCE of a relationship between credit score and insurance claims is already resolved.
Insurance is a game of predictable risks. We should use every means at our disposal to calculate and assign the costs where it belongs. If it is not assigned to the higher risk individuals, it will be divided among us all. Rates for all will go up to counterbalance the increased risk assumption, since it cannot be charged to individuals.
Insurance is a game of balancing risks. We should use every means available to calculate these and assign costs accordingly. If we are not allowed to do so, then rates will go up for all to accomodate the increase in risk no longer assignable to the individuals directly responsible.
Sorry for the double entry, it didn’t show up on my screen till after the 2nd post.
Sorry. I missed the date when credit profiling became ‘resolved’ and ‘undisputed’. Thanks for the concrete evidence of your opinions. That sure was some great reading. By the way, what entity did the research which proved the theory and maintains it is now undisputed? I missed the name in the replies.
How about every loss analysis done by every insurance company in the country? I swear, asserting that there’s no correlation is like poking one’s own eyes out and claiming it’s dark outside!
Hey Dar… FAIR ISAAC’S did the study if you must know (look it up). If people have to put food on the table vs. getting their car serviced what do you think is going to get done. Come on!!!
Fair Isaac is making money off of selling their computer modeling to Insurance companies – so there are more than a few questions as to not only the objective basis of the evidence that was dug up but how close the correlation might be not only in incidence but severity of any potential underwriting losses – particularly when many companies have made credit based scoring more than 50% of their premium variance and some as high as 90% of variance. Fair Isaac research may be no more than another cottage industry scam just like Bernie Madoff’s portfolio rate of return or computer hardware marketing using Y2K scare tactics. There is probably a grain of truth involved but it has to do more with credit scoring reflecting that some folks regularly pay their bills & the insurance company would rather deal with them than those who do not versus any correlation to accidents or claims.
On a side note, I noticed that they were also looking to take out other socio-economic factors such as education & occupation.
If I recall correctly occupation does have something of an impact on loss risk. As an example, doctors and nurses have a fairly high loss chance due to either being on call (ie ER or OB/GYN docs) or having been on duty for multiple shifts.
I had an ins. co. in calif. who would not insure anyone who worked the 2nd shift because they where driving home when people where leaveing the bars. The insurance company claim to have a study to prove they where correct.
If using credit score us unfair, bad public policy, not predictive, etc, then why hasn’t a company stepped up with a non-credit based product, advertised it to the public, and written a mountain of profitable business. Certainly the masses that dislike the use of credit-based pricing would like to do business with a company that uses this “consumer friendly” approach. I believe the fact that this hasn’t happened shows that credit does have a predictive quality.
So if companies can’t use characteristics to distribute higher prices to higher risks they will raise the price for everyone. Direct writers will pre screen offers/solicitations to better risks…. agents will lose.
If they can’t base premium on credit score, can’t they still base eligibility on credit score? EX. Credit score <660 you don't qualify for coverage with Company A.
The result of this would be that the standard carriers will no longer offer coverage at all to poor credit clients. The higher credit customers will still have their choice of carriers; the lower credit scores (i.e. lower income) will have less choice and therefore higher premiums.
Seems this could backfire and hurt the people it is intended to help. Imagine that, government intervention backfiring. Say it ain't so.
Well, in my state, it is unlawful to deny coverage due to a poor insurance score.
The government needs to keep its mits out of business. Look what happened when the fed told banks how much they could charge merchents. Now BoA is considering charging a $5 debit card fee a month. Will merchents lower their prices now that they don’t have to pay as much to CC companies? Don’t hold your breath.
I don’t believe it is illegal in Florida to deny coverage. If it falls below a certain tier, you won’t get a quote. Met Life is an example of this.
As for the debit fees, blame Dick Durbin for that one. I bank with Suntrust and they are already adding the $5 fee on.
I seriously doubt that restaurants are going to write a check to print new menus so they can lower the price of an entree from $12.99 to 12.45. But that’s what morons like Dick Durbin think. Career politicians have to go.
I think that the politicians that pass this legislative rubbish are either 1. Too naivie to realise what will REALLY happen when they pass this sort of crap; or 2. Don’t care what the outcome is, because they are just trying to get political points from the voters that don’t realise (aka, don’t think about the consequences of these laws entail) what really happens when laws restricting the free market will do.
Didn’t the fed do something similar with airline fees? Didn’t they tell airlines that they couldn’t charge a certain amount for certain fees? Did ticket prices go down? Not that I saw. Moreover, many airlines now charge you on how heavy your luggage is.
If you limit how a company does business too much, they will either 1. Move overseas; 2. Increase fees, the cost of their goods/services, ect ; 3. Close up shop.
I don’t understand why anyone would pay a fee to use a debit card when by doing so you are saving the bank money. BOA and Suntrust customers should request the charge be waived or move their accounts. If enough people move their accounts, and let the banks know why, the banks will drop the fees.
Sorry about the confusion. I am not looking for a ‘study’. What I would like to read is the research that was carried out over years (5, 10, 15 or 20)which yielded the data that proves credit profile/score influences/affects loss potential in any way, shape, or form. That’s all. Looking at 10,000 claims and finding a ‘common link’ or ‘common denominator’ is a study and you can prove anything you want using this method. Real research takes years and is not out to prove anything. The data reveals the truth. So please, just the name of one entity that has conducted real research. Thank you.
Useing credit score has no bearing on if you are a good or bad driver. It is a means to increase premium. Nevada auto insurance rates using the same demographics is 30 to 35% higher then california. Californis does not allow credit scoreing. California also has an elected insurance commissioner voted in by the consumer, not politcal PLUM giving to the insurance industry thanking them for their PAC MONEY. I also owned at one time 13 auto insurance offices in 3 states, CA. ID.& WA. BECAUSE WE HAD CONTINGENCY CONTRACTS WITH THE COMPANIES WE WHERE VERY CONCERN ABOUT OUR LOSS RATIO. OUR LOSS’S HAD NOTHING TO DO WITH CREDIT SCOREING. When the insurance companies would show us our loss ratio they would add an inflated “OBNR” THE following year it would be subtracted if no loss’s occured. The credit rateing industry has taken control of our lives, employment, insurace,etc.
Oh yes, Cali should be the benchmark for insurance. This coming from the same state that bans giving a prior insurance discount because its “not fair to charge a higher rate to someone who is currently uninsured”.
A credit score can shed some light on how responsible someone is. Now, just because you have a bad credit score does not mean you are not responsible. With this cruddy economy, many good, responsible peoples’ credit scores have suffered. But I’d venture to say there are not many people who are irresponsible but have a great insurance score. (BTW, credit scoring isn’t the only thing compaines look at when they determine an insurance score).