The purpose of this discrimatory \’tool\’ is to bump premiums whenever possible as it is shown now for several years…or is someone saying premiums came down lately.
The false statistics…what\’s the saying that liars figure and figures lie sounds about right regarding the analogy of low credit scores = high claim input..that is skewered since low credit scores go hand in hand with low income folks which then can be figured as a disproportiate sector in claim filing. Sure credit is a tool I guess but it is one for one purpose only. And yea, I have worked in the insurance claims field folks for a considerable time frame in multiple states and with companies and others and bs is still the same. The political-economic agends is what controls ; not equity.
What planet are you from? Auto insurance premiums have been falling across the country for a couple of years now. Since credit is race-neutral, credit scoring allows insurers to find and insure the responsible drivers in all territories, inlcuding urban areas rampant with fraud.
Without an intimate knowledge of insurance rating, it is acceptable that someone could lack an understanding of the significance of credit scoring. However, before you \”point the finger\” and claim that a practice is unfair, do your homework.
Consumers have been more fairly judged by their likelihood of filing claims due to the practice of credit scoring. Through multiple case studies, utilizing real data, the credit scoring is able to group individuals into a more realistic risk characteristic group. Afterall, insurance is about grouping individuals so that they may share the risk of loss across a larger field.
Would you say it is unfair that wealthy people in Florida pay a higher amount dollar-for-dollar for insurance on their homes because of the likelihood that it has a closer proximity to water? No, nobody says that – but the truth is that it has a higher probability of sustaining damage.
It is proven that the credit score works, and is a more \”fair\” predictor of losses than any other factor available.
Does anyone really expect us to believe that insurance companies have an agenda to keep low income people poor? What is the incentive to give rich people lower rates?
Folks the history of this credit crap does not lie. there is a clear corrilation in claims frequency and severity based on the credit score. And yes a low income person is clearly more likely to file a low dollar claim because they simply do not have the money to make small repairs, so should we give them the same rate but a higher deductible just to keep the claims down? I do believe however than SOME companies have not handled credit scoring responsibly and most of this can be blamed on the 3 or 4 credit bureaus and the hap hazard way they seem to handle things. They frequently screw up credit history and this could cost someone additional money on insurance. Now lets also make it clear that bad credit does not cost you more on insurance, rather good credit will get you a discount, at least that is the way filings are to be done in Florida. The problem with the rich versus poor argument is that rich people drive newer more expensive cars and they also have 10-25 times the insurance limits, which means in the event of an accident or loss that the company is on the hook for 10-25 times money than if the poor person had a claim.
Other than medical reasons or a nasty divorce there are few other excuses for poor credit other than lack of personal responsiblity to charge only what you can afford to pay back and to pay in a timely manner. What basis is there for insurance companies to keep poor people poor? none, but SOME MAY be a higher risk to the company.
I agree that Insurance scoring certainly has merit BUT it should be used as a discount much like an age 55 or driver training discount if the score meets a cetain level but not to determine the actual base rate itself or what will we see next such as a big brother Choicepoint factor that tells if you have a cell phone account because you might use it while driving or is the applicant overweight indicating that person might eat while driving!
Where does Underwriting begin?
Answer: An Agent
Is it possible that all these new variables are there to do away with the need for an neighborhood Agent?
How much is intrusion into our private life and after talking to many politicians it seems at least some are fed up enough to say that maybe mandatory insurance should be done away with if individual voters feel that this is an intrusion of their private affairs.
Ok, for the Do your homework and what\’s the point team here goes: Now I understand that I do not understand what it is that is involved despite reading several newsletters like this one and getting info from Best and other journals but I have read the arguements pro and con in some detail. Some anologies provided by you folks don\’t stand up I think …not sure how you got to why keep the poor, poor, but a quick, realistic answer to this rhetorical question would be money: i WAS TAUGHT that if an applicant did not qualify for the Premium Account then by golly they were judged \’non\’standard\’ and guess what they were sur charged for that HONOR. The point I guess is that we pay more for living in the wrong part of the country or world, for our occupations, for our age, for our driving experience, for our frequency for driving, for living on the coasts -East, West and of course, now the Gulf Coast; more if we dare to file a claim, more if we have a claims history; more if we are in the wrong age group-subject to the kind of insurance required and now MORE if our Credit Score is not right or to low. Just a tool you say and is not that what insurance companies are to do, lump us together for stat purposes?
Yea, but you know some of the most expensive claims that I ever handled involved folks with GREAT Credit Histories. Credit scoring is by itself, per se, discriminaatory. It really must be for what it is and it has been greatly recognized as such. Just like the cost of fuel for a car impacts the poor more than those who are not poor so does credit scoring. What ever happened to Experience rating as a tool, or wisdom? imho ths device is nothing more than the application of a \’tool\’ to increase premiums for those who can least afford that increase and if you believe that stats are not manipulated for the purpose required then this bridge I have been trying to offload is waiting for you in the desert and I would like to hear from those interested, but only THOSE using there real names. If ins. premiums are not rising and have risen to historic levels please explain all those gloatings I read about on tremendous profits and gains across the board -all lines in this regard. I feel confident , I guess, that the new democratically controlled congress may take issue with credit scoring along with other major insurance issues. This device is not really needed; a pretext is still a pretext I believe. Well, my time has run out so thanks for reading.
It\’s funny how everyone turns credit into an indicator of income or race. Assuming that the Industry using credit scoring to target lower-income or minority people and charge those people more is asinine. Credit scores are indicators of RESPONSIBILITY; not income, race, religion, etc. A white male with $100k/yr income may pay more with poor credit than an African American female with $20k/yr income who was responsible and took care of her finances. If you\’re too irresponsible to pay your bills and not run out and charge a Nintendo Wii despite not having money, you\’re not going to be able to properly maintain the safety features of your automobile, are more likely to drive reckelessly, and (statics show time-and-time again) that you\’re more likely to have an accident and or file a claim. It\’s not discriminatory, it\’s not Big Brother, it\’s not \”The Man keeping down the poor\”… it\’s a statistic used to properly rate a policy.
The last comment claiming that there is a link between credit score and RESPONSIBILITY is both ignorant and uninformed. The poster also stereo-types low credit score individuals with the \”charging the Wii\” comment. The poster also incorrectly states that there is a correlation between accidents and credit score – there is not!! There is only a correlation between CLAIMS and Credit score! The two are not the same thing. Please show me a link between accidents and credit score and then the RESPONSIBILITY argument might carry some weight…..
It is a tool but one used unfarily and discriminatory…that is the real world.I did not bring up race but I see that you have so from that perspective you already made one of my implied but unstated opinions. And, I will match you any statistic that you care to use and , manipulate it for the purpose of winning the presentation; not that difficult to do. It is an unwise \\\\\\\’tool\\\\\\\’ if you wish to call it that for use of the rating system you claim. Reality tell\\\\\\\’s us a much different story I bet your claim of a correlation of low credit and claims frequency goes out the window when you only insure low-income, pardon, low scoring individuals. Pretext remains what it is. Sorry, we do not agree that it is what it is cracked up to be. That\\\\\\\’s all from me.
I would say it would be fair that wealthy people in Florida pay a higher amount dollar-for-dollar for insurance on their homes because of the likelihood that it has a closer proximity to water because the truth is that it has a higher probability of sustaining damage.
Yea and by your reasoning if those same wealthy people with high priced homes in a potential dangerous environment; but not necessarily so, pay that premium then IF THEY SCORE LOW on the CREDIT APPLICATION- a tool used for underwriting purposes…supposedly, then, they would pay more for that premium. Get that buck factor up there is the job. Advocating low credit scores to claims is vodoo economics at best. And yea, I have done my homework and even better have worked these scenarious in real life for multiple P&c COMPANIES. Actually, homework has nothing to do with this quandry; just money and definitiely not equity. IMHO.
As an accountant I can make the numbers show just about any theory as a fact. We\’ve had this discussion adnusem so there is no sense arguing about it. If your credit report was wrong (reports show 30% have errors) and you were charged more then we may hear a different arguement from you. Do you also believe that your educational background somehow has a correlation to your driving record? Many companies are now using that as an underwriting \”tool\” also. Let\’s face facts, credit and education are only used to redline, nothing more.
JR – you are so wrong on so many levels. Do you even work in the insurance industry? Maybe you do but being a mail boy for an insurance carrier doesn\’t mean you understand how it works.
Chrystal,
I am an Insurance Agent and in my opinion you are right.
I have a customer who has a perfect driving record who just got a $200.00 per year rate increase because he went into a local Target store and purchased a fairly expensive item and was offered a 10% discount if he made the purchase with a Target credit card and he did as most of us would,he opened the account immediately and due to his 800+ score received a $10,000 credit limit,made the purchase and the same day paid off the balance.Guess what?his insurance score dropped 2 tiers and by the way he showed me his 2005 report and his 2006 report and this was the ONLY change.It is evident that something is wrong when we have to worry about a rate increase every time we buy something.
This sounds like Communism and for the Agents who thinks this is fair could it be because the more the Insured pays the more you make.
I think if we treat people fairly the rest will take care of itself
I don\’t work in insurance nor do I claim to be an expert in any facet of this problem. I do however have some very strong opinions. I was under the impression that a credit score determined how likely a person is to pay their debt: i.e. a car loan, mortgage, rent, credit cards, etc. Silly me. And last time I checked a person would file an insurance claim when they get in an accident. (if there is something else someone would file a claim for someone please enlighten me because I am apparently missing out on some money.) So the solution to this could either be similar to utilities (a deposit required and they won\’t have to check your credit) or you can pay your entire six month/one year bill up front and they won\’t have to worry about a person defaulting on their payment. That seems to me how credit should work… that\’s how everyone else uses it anyway. So the insurance companies claims about the link between credit and filing a claim must really be about the notion that people with bad credit get in more accidents? Or poor people get in more accidents? Or this is just another way for the insurance industry to make many more millions this year? Any way you skew this it is wrong. My insurance increased my rates when I was rear-ended because it \”shows a pattern\”!!! I didn\’t file a claim… her insurance paid for it. What we really need is a consumer advocate independent of the government and the insurance lobby to stand up for us, and who will be accountable to us. This is politics and capitalism at its worst… any way to screw the little guy.
I believe the credit scoring process is a method used by insurers to \”cherry pick\” their customers in order to effectively cross cell more high end products such as securities, life insurance, long term care, commercial insurance and other more profitable products. Also it is a way for the big insurers to squeeze more money out of the poor. The poor are used to be walked on like a rug. So there cries are ignored. Look at who is fighting the illegal and immoral war in Iraq. The poor and middle class. While Dick Cheney and his republican pals get more wealth.
A Public Adjuster works on a commission basis. This is what motivates the adjuster to get as much for his/her client as the policy allows. This explains why insurance companies hate public adjusters.
The purpose of this discrimatory \’tool\’ is to bump premiums whenever possible as it is shown now for several years…or is someone saying premiums came down lately.
The false statistics…what\’s the saying that liars figure and figures lie sounds about right regarding the analogy of low credit scores = high claim input..that is skewered since low credit scores go hand in hand with low income folks which then can be figured as a disproportiate sector in claim filing. Sure credit is a tool I guess but it is one for one purpose only. And yea, I have worked in the insurance claims field folks for a considerable time frame in multiple states and with companies and others and bs is still the same. The political-economic agends is what controls ; not equity.
And suddenly I find myself hungry for a statistics kabob…
What planet are you from? Auto insurance premiums have been falling across the country for a couple of years now. Since credit is race-neutral, credit scoring allows insurers to find and insure the responsible drivers in all territories, inlcuding urban areas rampant with fraud.
Without an intimate knowledge of insurance rating, it is acceptable that someone could lack an understanding of the significance of credit scoring. However, before you \”point the finger\” and claim that a practice is unfair, do your homework.
Consumers have been more fairly judged by their likelihood of filing claims due to the practice of credit scoring. Through multiple case studies, utilizing real data, the credit scoring is able to group individuals into a more realistic risk characteristic group. Afterall, insurance is about grouping individuals so that they may share the risk of loss across a larger field.
Would you say it is unfair that wealthy people in Florida pay a higher amount dollar-for-dollar for insurance on their homes because of the likelihood that it has a closer proximity to water? No, nobody says that – but the truth is that it has a higher probability of sustaining damage.
It is proven that the credit score works, and is a more \”fair\” predictor of losses than any other factor available.
Does anyone really expect us to believe that insurance companies have an agenda to keep low income people poor? What is the incentive to give rich people lower rates?
Folks the history of this credit crap does not lie. there is a clear corrilation in claims frequency and severity based on the credit score. And yes a low income person is clearly more likely to file a low dollar claim because they simply do not have the money to make small repairs, so should we give them the same rate but a higher deductible just to keep the claims down? I do believe however than SOME companies have not handled credit scoring responsibly and most of this can be blamed on the 3 or 4 credit bureaus and the hap hazard way they seem to handle things. They frequently screw up credit history and this could cost someone additional money on insurance. Now lets also make it clear that bad credit does not cost you more on insurance, rather good credit will get you a discount, at least that is the way filings are to be done in Florida. The problem with the rich versus poor argument is that rich people drive newer more expensive cars and they also have 10-25 times the insurance limits, which means in the event of an accident or loss that the company is on the hook for 10-25 times money than if the poor person had a claim.
Other than medical reasons or a nasty divorce there are few other excuses for poor credit other than lack of personal responsiblity to charge only what you can afford to pay back and to pay in a timely manner. What basis is there for insurance companies to keep poor people poor? none, but SOME MAY be a higher risk to the company.
I agree that Insurance scoring certainly has merit BUT it should be used as a discount much like an age 55 or driver training discount if the score meets a cetain level but not to determine the actual base rate itself or what will we see next such as a big brother Choicepoint factor that tells if you have a cell phone account because you might use it while driving or is the applicant overweight indicating that person might eat while driving!
Where does Underwriting begin?
Answer: An Agent
Is it possible that all these new variables are there to do away with the need for an neighborhood Agent?
How much is intrusion into our private life and after talking to many politicians it seems at least some are fed up enough to say that maybe mandatory insurance should be done away with if individual voters feel that this is an intrusion of their private affairs.
Ok, for the Do your homework and what\’s the point team here goes: Now I understand that I do not understand what it is that is involved despite reading several newsletters like this one and getting info from Best and other journals but I have read the arguements pro and con in some detail. Some anologies provided by you folks don\’t stand up I think …not sure how you got to why keep the poor, poor, but a quick, realistic answer to this rhetorical question would be money: i WAS TAUGHT that if an applicant did not qualify for the Premium Account then by golly they were judged \’non\’standard\’ and guess what they were sur charged for that HONOR. The point I guess is that we pay more for living in the wrong part of the country or world, for our occupations, for our age, for our driving experience, for our frequency for driving, for living on the coasts -East, West and of course, now the Gulf Coast; more if we dare to file a claim, more if we have a claims history; more if we are in the wrong age group-subject to the kind of insurance required and now MORE if our Credit Score is not right or to low. Just a tool you say and is not that what insurance companies are to do, lump us together for stat purposes?
Yea, but you know some of the most expensive claims that I ever handled involved folks with GREAT Credit Histories. Credit scoring is by itself, per se, discriminaatory. It really must be for what it is and it has been greatly recognized as such. Just like the cost of fuel for a car impacts the poor more than those who are not poor so does credit scoring. What ever happened to Experience rating as a tool, or wisdom? imho ths device is nothing more than the application of a \’tool\’ to increase premiums for those who can least afford that increase and if you believe that stats are not manipulated for the purpose required then this bridge I have been trying to offload is waiting for you in the desert and I would like to hear from those interested, but only THOSE using there real names. If ins. premiums are not rising and have risen to historic levels please explain all those gloatings I read about on tremendous profits and gains across the board -all lines in this regard. I feel confident , I guess, that the new democratically controlled congress may take issue with credit scoring along with other major insurance issues. This device is not really needed; a pretext is still a pretext I believe. Well, my time has run out so thanks for reading.
It\’s funny how everyone turns credit into an indicator of income or race. Assuming that the Industry using credit scoring to target lower-income or minority people and charge those people more is asinine. Credit scores are indicators of RESPONSIBILITY; not income, race, religion, etc. A white male with $100k/yr income may pay more with poor credit than an African American female with $20k/yr income who was responsible and took care of her finances. If you\’re too irresponsible to pay your bills and not run out and charge a Nintendo Wii despite not having money, you\’re not going to be able to properly maintain the safety features of your automobile, are more likely to drive reckelessly, and (statics show time-and-time again) that you\’re more likely to have an accident and or file a claim. It\’s not discriminatory, it\’s not Big Brother, it\’s not \”The Man keeping down the poor\”… it\’s a statistic used to properly rate a policy.
The last comment claiming that there is a link between credit score and RESPONSIBILITY is both ignorant and uninformed. The poster also stereo-types low credit score individuals with the \”charging the Wii\” comment. The poster also incorrectly states that there is a correlation between accidents and credit score – there is not!! There is only a correlation between CLAIMS and Credit score! The two are not the same thing. Please show me a link between accidents and credit score and then the RESPONSIBILITY argument might carry some weight…..
It is a tool but one used unfarily and discriminatory…that is the real world.I did not bring up race but I see that you have so from that perspective you already made one of my implied but unstated opinions. And, I will match you any statistic that you care to use and , manipulate it for the purpose of winning the presentation; not that difficult to do. It is an unwise \\\\\\\’tool\\\\\\\’ if you wish to call it that for use of the rating system you claim. Reality tell\\\\\\\’s us a much different story I bet your claim of a correlation of low credit and claims frequency goes out the window when you only insure low-income, pardon, low scoring individuals. Pretext remains what it is. Sorry, we do not agree that it is what it is cracked up to be. That\\\\\\\’s all from me.
I would say it would be fair that wealthy people in Florida pay a higher amount dollar-for-dollar for insurance on their homes because of the likelihood that it has a closer proximity to water because the truth is that it has a higher probability of sustaining damage.
Yea and by your reasoning if those same wealthy people with high priced homes in a potential dangerous environment; but not necessarily so, pay that premium then IF THEY SCORE LOW on the CREDIT APPLICATION- a tool used for underwriting purposes…supposedly, then, they would pay more for that premium. Get that buck factor up there is the job. Advocating low credit scores to claims is vodoo economics at best. And yea, I have done my homework and even better have worked these scenarious in real life for multiple P&c COMPANIES. Actually, homework has nothing to do with this quandry; just money and definitiely not equity. IMHO.
As an accountant I can make the numbers show just about any theory as a fact. We\’ve had this discussion adnusem so there is no sense arguing about it. If your credit report was wrong (reports show 30% have errors) and you were charged more then we may hear a different arguement from you. Do you also believe that your educational background somehow has a correlation to your driving record? Many companies are now using that as an underwriting \”tool\” also. Let\’s face facts, credit and education are only used to redline, nothing more.
JR – you are so wrong on so many levels. Do you even work in the insurance industry? Maybe you do but being a mail boy for an insurance carrier doesn\’t mean you understand how it works.
Chrystal,
I am an Insurance Agent and in my opinion you are right.
I have a customer who has a perfect driving record who just got a $200.00 per year rate increase because he went into a local Target store and purchased a fairly expensive item and was offered a 10% discount if he made the purchase with a Target credit card and he did as most of us would,he opened the account immediately and due to his 800+ score received a $10,000 credit limit,made the purchase and the same day paid off the balance.Guess what?his insurance score dropped 2 tiers and by the way he showed me his 2005 report and his 2006 report and this was the ONLY change.It is evident that something is wrong when we have to worry about a rate increase every time we buy something.
This sounds like Communism and for the Agents who thinks this is fair could it be because the more the Insured pays the more you make.
I think if we treat people fairly the rest will take care of itself
I don\’t work in insurance nor do I claim to be an expert in any facet of this problem. I do however have some very strong opinions. I was under the impression that a credit score determined how likely a person is to pay their debt: i.e. a car loan, mortgage, rent, credit cards, etc. Silly me. And last time I checked a person would file an insurance claim when they get in an accident. (if there is something else someone would file a claim for someone please enlighten me because I am apparently missing out on some money.) So the solution to this could either be similar to utilities (a deposit required and they won\’t have to check your credit) or you can pay your entire six month/one year bill up front and they won\’t have to worry about a person defaulting on their payment. That seems to me how credit should work… that\’s how everyone else uses it anyway. So the insurance companies claims about the link between credit and filing a claim must really be about the notion that people with bad credit get in more accidents? Or poor people get in more accidents? Or this is just another way for the insurance industry to make many more millions this year? Any way you skew this it is wrong. My insurance increased my rates when I was rear-ended because it \”shows a pattern\”!!! I didn\’t file a claim… her insurance paid for it. What we really need is a consumer advocate independent of the government and the insurance lobby to stand up for us, and who will be accountable to us. This is politics and capitalism at its worst… any way to screw the little guy.
I believe the credit scoring process is a method used by insurers to \”cherry pick\” their customers in order to effectively cross cell more high end products such as securities, life insurance, long term care, commercial insurance and other more profitable products. Also it is a way for the big insurers to squeeze more money out of the poor. The poor are used to be walked on like a rug. So there cries are ignored. Look at who is fighting the illegal and immoral war in Iraq. The poor and middle class. While Dick Cheney and his republican pals get more wealth.
A Public Adjuster works on a commission basis. This is what motivates the adjuster to get as much for his/her client as the policy allows. This explains why insurance companies hate public adjusters.