I am a seasoned insurance professional who feels very strongly that this is not fair for individuals. Does anyone know of an organization that I can support to help fight this?
I know some of you in CO may not understand the word “YALL” but the study has already been completed, YALL. Just because his name is JIMMY doesn’t mean he is a DUMB REDNECK. He’s correct “Credit Scoring has been mathmatically correlated to insurance risks… Here’s and excerpt of the article from the Study: Email me and I’ll send you the whole article if you don’t beleive me.
Credit Scoring Shown to Improve Underwriting Accuracy
NEW YORK June 23 (BestWire) – Credit-based insurance scores are
“unquestionably” connected to insurance risk, according to a new study
that reviewed data from almost 2.7 million automobiles in the United
States.
Researchers from EPIC Actuaries LLC on June 21 released results of the
largest and most comprehensive insurance industry sponsored study
looking at the correlation between credit history and insurance risk at
the 2003 Summer National Meeting of the National Association of
Insurance Commissioners in New York.
All you corporate hater’s you may begin now. Start shooting holes in it……
Actuaries can make numbers indicate whatever they want. It also depends on the data used to develop their conclusions. I disagree with the relationship of credit score and claims.
I believe the organization Deadbeats R Us is someone fighting credit scoring. How ridiculous that someone who shows resposibility in their financial matters might also be a responsible driver.
Smart agents are keeping score with the claims filed by their clients. Within a few years we will have written proof that those with good credit scores have just as many,if not more claims than those with poor credit scores. Keep track within your agency by writing the credit score on your copy of the loss reports you receive for 2005 and really determine who has more claims. Is redlining a possibility?
Jim,
Hope you are not an insurance agent, for your clients sake. This is some bean counters cheap way to underwrite. Once this is in place your underwriting wil all come from India. Over the past 33 years I m sure some of my customers had credit scores under 650. I can not remember one of the claims we paid that could be related to “bad credit:. I do recall some of my wealthy clients getting caught for filing fake theft claims. Stolen BMW, rolex watches etc. In todays credit happy country there are many people who have low scores.
Smart agents deal with handfuls (at most 100s of claims). The databases that do these number crunchings have hundreds of thousands of records.
When will people realize that statistical analysis done by insurance companies is done to be better predictors of bad risks. It is to this end that insurers do correlational studies using multi variate methods. Some things that people thought would have been indicators of bad risk end up being proven false. Others surprisingly are indicative of bad risk.
It’s not about bad driving, everybody! It’s also about paying claims. After all that’s why an insurance company exists. Credit scoring is the truest way to predict claims. And even that should make intuitive sense.
LLCJ if you mgot your information from the Texas DOI I can see how you where hood winked. Those good old boys in Texas are bought and owned by company lobbists. We have yet to see real data proving low credit scores are a per warning of claims to come. And lets not forget how many people are being incorrectly scored. You might want to pay $34.00 to get a copy of your credit, I would be surprises if you did not find any mistakes.
While I do feel there is a correlation between credit scores and future claims, I also KNOW many of the credit reports are
wrong!!! I’m not sure the numbers are not
massaged some by the Companies to prove their points.I really feel,like most things, the truth is some where in the middle.
Is there an organization out there to fight this?
Jimmy you are so wrong, you must be an underwriter. THERE IS ABSOLUTLEY NO PROOF THAT BAD CREDIT EQUALS MORE CLAIMS!!!
this is just another way insurance companies stick to consumers. They picked Colorado because the DOI here is a complete joke. This would never fly in states like CA, where they have a DOI that is at the very least competent (underline very least)
Sorry to inform you, some carriers in California are using credit scores. Have had new & renewals from Hartford rejected because of credit scores. In one case they used an owners SS number to rate her although her corporate credit score was ok. This client had a small office policy (Real Estate) her personal score was in part due to a divorce 4 or 5 years ago. Hopfully when enough people get angry, you will see a special on 60 minutes, dateline or 20/20. You can bet the insurance industry will be made to look like jerks.
And this isn’t the only one. Independent studies (read “not by actuaries”), including a very comprehensive study conducted by the University of Texas, have also shown an undeniable connection between credit scores and claims.
And it’s not just claim frequency! Severity of the claims also tends to increase as the credit score decreases.
It stands to reason that those who take the responsibility to effectively manage their credit would also be those with a greater propensity to perform routine home maintenance, drive safer vehicles, etc.
I still don’t buy it! Numbers will tell you anything you want. I know too many real life situations where the credit score and claims have no correlation. There are unforeseen circumstances that can effect even the best “credit handler”, ie: loss of job, injury; illness – there are many issues that can destroy or have an adverse effect on one’s credit yet have no bearing on their filing of claims.
While some people do have poor credit scores due to unfortunate life events the majority of poor scores are due to lifestyle choices. That 90% hurts the unfortunate 10%. Maybe some day there will be a way to isolate that 10%
1st of all, My name is James, but I go by Jimmy. It’s more informal, and I am able to get more rapport this way.
2nd of all, there are always going to be people that say that credit does not influent risk (aka claims frequency/severity) but if you know what the law of large numbers is, you will notice that it really does.
I am not here to bash people and call them names, unlike some other people.
For the people who truly believe that credit does not influence claims risk, you must have poor credit (not always the case)
Anyways, I have to go service my clients. Have a nice weekend.
Jimmy glad your name is so popular. Somewhere between using and not using credit scores is the truth. Insurance companies are looking for ways to cut real live underwriting and inspections. When you assume people who disagree with you must have bad credit, you make an *** out of you and me. If you are in this business long enough and care about your clients, you would at least have an open mind. All that credit scoring, in underwriting is going to do is make it eaiser for carrires to write business on line. No agents, no commissions and no one to stick up for clients. Jimmy have a great week end, some of us old time agents are still working to protect our customers.
Lapses of insurance are very bad. If you show you have a higher risk of not paying, that shows that you have a higher risk of having a lapse of insurance, which = higher insurance premiums.
Jimmy we are going to have agree to disagree. Does not sound like your an agent, or if you are, no your clients side. Some people with poor credit were not rated a high insurance risk. My favorite is President Harry Truman, who filed for bankrupty as did Governor Connly of Those 2 men paid every cent owed to creditors. JC Penny’s and our current president filed for bankrupty. The difference is JC Penny & President Bush didn’t repay the stock holders. George Bush got his money out of the company several weeks before his company failed. Insider trading charges surpressed. I hope you or your family never suffer major medical bills not covered by insurance, that you can not pay. I would respect a client who has a lousy credit score because he signed to save a family members life.
Jimmy we are going to have agree to disagree. Does not sound like your an agent, or if you are, not your clients side. Some people with poor credit were not rated a high insurance risk. My favorite is President Harry Truman, who filed for bankrupty as did Governor Connly of Those 2 men paid every cent owed to creditors. JC Penny’s and our current president filed for bankrupty. The difference is JC Penny & President Bush didn’t repay the stock holders. George Bush got his money out of the company several weeks before his company failed. Insider trading charges surpressed. I hope you or your family never suffer major medical bills not covered by insurance, that you can not pay. I would respect a client who has a lousy credit score because he signed to save a family members life.
LLCJ,
Nice comments, you sound like a reasonable, smart person. You had me until you said these studies were done by the University of Texas. Who paid for these studies? Was it funded by the University or corporate interest. I could probaly write a book on studies, paid for by corporations, that we now know were false. Just look at what is happening to the drug industry. I’m not trying to sound negative, just keep an open mind. We are at a time in our history, where greed can buy almost anything.
many of the comments read here refer to personal experiences of clients’ or friends whose claims history/driving record does not relate well to their credit risk. Of course. What you all have to realize is that these studies are done with hundreds of thousands of risks (if not millions). The studies establish strong trends. And it is these trends that enable rating.
I’m not a baseball person, but an imperfect analogy would be the baseball team that pulls its right handed pitcher because of a certain handed batter. Just because that batter hits a grand slam doesn’t disprove the fact that right handed pitchers don’t pitch well to certain handed batters.
For the one that said that numbers can be “massaged”. When you’re dealing with this many records, that is unreasonable. You are also assuming that there is an intention out there to discover it even if it isn’t there. This point was addressed by the poster who pointed out that these studies were done by mathematicians at the University of Texas (non insurance people), and by actuaries (insurance people).
I totally agree with Joe, I am an insurance agent looking out for the best interest of my clients. The amount of money spent on getting this pushed through our government should be looked at.
My personal feeling is that this is just another way for insurance companies to stop actually having to underwrite a risk. Basically taking the lazy way out.
Numbers and figures can be manipulated, and talking government into something like this is easy. Just show them bottom line numbers, pay them millions in soft money and poof Credit scoring is a OK! I know I’m simplifing the process, but am I wrong???I think history proves me right and that soft money makes our government go around!
Anatomist,
The gerneric name for Kocher’s reflex is Testicular compression, leading to abdominal pair. So what is your point? Are you saying agents and thier clients are getting our testis pulled? My Dad used to say, when someone was lieing or tring to take advantage of him, “Right is right and wrong is wrong. If you are tinkling on my leg don’t tell its raining”
Goes the other way for the consumer protection. In order for an insurance company to live up to their commitments and pay their bills on time. Someone such as myself would not have the necessary paper work to prove by the insurance companies credit scoring methodology: is in fact a reliable source of information. In order to bring attention why my insurance rating score is what it is. Also, goes for the (3) major credit reporting agencies that these said insurance carrier’s failed to pay claims on and has since ended up as a negetive on my credit reports. Not to mention the repo of my car, every other compromise of credit standing. So, really what the “wise” Colorado Legislator’s probably meant was “what comes around goes around”.
I am a seasoned insurance professional who feels very strongly that this is not fair for individuals. Does anyone know of an organization that I can support to help fight this?
I know some of you in CO may not understand the word “YALL” but the study has already been completed, YALL. Just because his name is JIMMY doesn’t mean he is a DUMB REDNECK. He’s correct “Credit Scoring has been mathmatically correlated to insurance risks… Here’s and excerpt of the article from the Study: Email me and I’ll send you the whole article if you don’t beleive me.
Credit Scoring Shown to Improve Underwriting Accuracy
NEW YORK June 23 (BestWire) – Credit-based insurance scores are
“unquestionably” connected to insurance risk, according to a new study
that reviewed data from almost 2.7 million automobiles in the United
States.
Researchers from EPIC Actuaries LLC on June 21 released results of the
largest and most comprehensive insurance industry sponsored study
looking at the correlation between credit history and insurance risk at
the 2003 Summer National Meeting of the National Association of
Insurance Commissioners in New York.
All you corporate hater’s you may begin now. Start shooting holes in it……
why is it not fair? it has been proven that lower credit scores = more claims = more payout = higher risk.
just like someone with speeding tickets, they deserve to pay higher insurance.
Jimmy is incorrect. It has NOT been proven. More studies on this subject are being conducted as you write your unproved fact.
For you to equate a speeding ticket with a “bad” credit score is absurd.
The financial and insurance industry really lobbied to get this defeated.
One word: PROPAGANDA
I’m not saying speeding tickets give bad credit, actually listen to what I’m saying
Bad credit is proven to have more claims.
More speeding tickets is proven to have a higher risk of getting into a claim as well.
2 different situations, but both equate to higher claims = higher risk = higher rates.
The studies are numerous, Winston, that prove a link between insurance claims and losses and credit risk.
The statistical studies done by the actuaries prove beyond any doubt that this is true. (Doubt means weird data, etc.)
Actuaries can make numbers indicate whatever they want. It also depends on the data used to develop their conclusions. I disagree with the relationship of credit score and claims.
I believe the organization Deadbeats R Us is someone fighting credit scoring. How ridiculous that someone who shows resposibility in their financial matters might also be a responsible driver.
Smart agents are keeping score with the claims filed by their clients. Within a few years we will have written proof that those with good credit scores have just as many,if not more claims than those with poor credit scores. Keep track within your agency by writing the credit score on your copy of the loss reports you receive for 2005 and really determine who has more claims. Is redlining a possibility?
Jim,
Hope you are not an insurance agent, for your clients sake. This is some bean counters cheap way to underwrite. Once this is in place your underwriting wil all come from India. Over the past 33 years I m sure some of my customers had credit scores under 650. I can not remember one of the claims we paid that could be related to “bad credit:. I do recall some of my wealthy clients getting caught for filing fake theft claims. Stolen BMW, rolex watches etc. In todays credit happy country there are many people who have low scores.
Smart agents deal with handfuls (at most 100s of claims). The databases that do these number crunchings have hundreds of thousands of records.
When will people realize that statistical analysis done by insurance companies is done to be better predictors of bad risks. It is to this end that insurers do correlational studies using multi variate methods. Some things that people thought would have been indicators of bad risk end up being proven false. Others surprisingly are indicative of bad risk.
Read the study done by an the texas department of insurance. http://www.tdi.state.tx.us/commish/credit3.html
It’s not about bad driving, everybody! It’s also about paying claims. After all that’s why an insurance company exists. Credit scoring is the truest way to predict claims. And even that should make intuitive sense.
LLCJ if you mgot your information from the Texas DOI I can see how you where hood winked. Those good old boys in Texas are bought and owned by company lobbists. We have yet to see real data proving low credit scores are a per warning of claims to come. And lets not forget how many people are being incorrectly scored. You might want to pay $34.00 to get a copy of your credit, I would be surprises if you did not find any mistakes.
While I do feel there is a correlation between credit scores and future claims, I also KNOW many of the credit reports are
wrong!!! I’m not sure the numbers are not
massaged some by the Companies to prove their points.I really feel,like most things, the truth is some where in the middle.
Is there an organization out there to fight this?
Jimmy you are so wrong, you must be an underwriter. THERE IS ABSOLUTLEY NO PROOF THAT BAD CREDIT EQUALS MORE CLAIMS!!!
this is just another way insurance companies stick to consumers. They picked Colorado because the DOI here is a complete joke. This would never fly in states like CA, where they have a DOI that is at the very least competent (underline very least)
Sorry to inform you, some carriers in California are using credit scores. Have had new & renewals from Hartford rejected because of credit scores. In one case they used an owners SS number to rate her although her corporate credit score was ok. This client had a small office policy (Real Estate) her personal score was in part due to a divorce 4 or 5 years ago. Hopfully when enough people get angry, you will see a special on 60 minutes, dateline or 20/20. You can bet the insurance industry will be made to look like jerks.
And this isn’t the only one. Independent studies (read “not by actuaries”), including a very comprehensive study conducted by the University of Texas, have also shown an undeniable connection between credit scores and claims.
And it’s not just claim frequency! Severity of the claims also tends to increase as the credit score decreases.
It stands to reason that those who take the responsibility to effectively manage their credit would also be those with a greater propensity to perform routine home maintenance, drive safer vehicles, etc.
I still don’t buy it! Numbers will tell you anything you want. I know too many real life situations where the credit score and claims have no correlation. There are unforeseen circumstances that can effect even the best “credit handler”, ie: loss of job, injury; illness – there are many issues that can destroy or have an adverse effect on one’s credit yet have no bearing on their filing of claims.
While some people do have poor credit scores due to unfortunate life events the majority of poor scores are due to lifestyle choices. That 90% hurts the unfortunate 10%. Maybe some day there will be a way to isolate that 10%
wow, look at my name thrown all over this.
1st of all, My name is James, but I go by Jimmy. It’s more informal, and I am able to get more rapport this way.
2nd of all, there are always going to be people that say that credit does not influent risk (aka claims frequency/severity) but if you know what the law of large numbers is, you will notice that it really does.
I am not here to bash people and call them names, unlike some other people.
For the people who truly believe that credit does not influence claims risk, you must have poor credit (not always the case)
Anyways, I have to go service my clients. Have a nice weekend.
Jimmy glad your name is so popular. Somewhere between using and not using credit scores is the truth. Insurance companies are looking for ways to cut real live underwriting and inspections. When you assume people who disagree with you must have bad credit, you make an *** out of you and me. If you are in this business long enough and care about your clients, you would at least have an open mind. All that credit scoring, in underwriting is going to do is make it eaiser for carrires to write business on line. No agents, no commissions and no one to stick up for clients. Jimmy have a great week end, some of us old time agents are still working to protect our customers.
Regardless of how much people feel that credit does NOT affect risk, take a look at other aspects where credit is looked at.
You want to buy a house, you need to get a loan. The bank will check your credit, which is their assessment of your risk of paying the payment.
You want to buy a car, you need to get a loan. The bank will check your credit, which is their assessment of your risk of paying the bill as well.
You get insurance, they check your credit, which is their assessment of your risk of paying the bill.
Worse credit = higher interest payment = higher payment.
Lapses of insurance are very bad. If you show you have a higher risk of not paying, that shows that you have a higher risk of having a lapse of insurance, which = higher insurance premiums.
Jimmy we are going to have agree to disagree. Does not sound like your an agent, or if you are, no your clients side. Some people with poor credit were not rated a high insurance risk. My favorite is President Harry Truman, who filed for bankrupty as did Governor Connly of Those 2 men paid every cent owed to creditors. JC Penny’s and our current president filed for bankrupty. The difference is JC Penny & President Bush didn’t repay the stock holders. George Bush got his money out of the company several weeks before his company failed. Insider trading charges surpressed. I hope you or your family never suffer major medical bills not covered by insurance, that you can not pay. I would respect a client who has a lousy credit score because he signed to save a family members life.
Jimmy we are going to have agree to disagree. Does not sound like your an agent, or if you are, not your clients side. Some people with poor credit were not rated a high insurance risk. My favorite is President Harry Truman, who filed for bankrupty as did Governor Connly of Those 2 men paid every cent owed to creditors. JC Penny’s and our current president filed for bankrupty. The difference is JC Penny & President Bush didn’t repay the stock holders. George Bush got his money out of the company several weeks before his company failed. Insider trading charges surpressed. I hope you or your family never suffer major medical bills not covered by insurance, that you can not pay. I would respect a client who has a lousy credit score because he signed to save a family members life.
d
LLCJ,
Nice comments, you sound like a reasonable, smart person. You had me until you said these studies were done by the University of Texas. Who paid for these studies? Was it funded by the University or corporate interest. I could probaly write a book on studies, paid for by corporations, that we now know were false. Just look at what is happening to the drug industry. I’m not trying to sound negative, just keep an open mind. We are at a time in our history, where greed can buy almost anything.
many of the comments read here refer to personal experiences of clients’ or friends whose claims history/driving record does not relate well to their credit risk. Of course. What you all have to realize is that these studies are done with hundreds of thousands of risks (if not millions). The studies establish strong trends. And it is these trends that enable rating.
I’m not a baseball person, but an imperfect analogy would be the baseball team that pulls its right handed pitcher because of a certain handed batter. Just because that batter hits a grand slam doesn’t disprove the fact that right handed pitchers don’t pitch well to certain handed batters.
For the one that said that numbers can be “massaged”. When you’re dealing with this many records, that is unreasonable. You are also assuming that there is an intention out there to discover it even if it isn’t there. This point was addressed by the poster who pointed out that these studies were done by mathematicians at the University of Texas (non insurance people), and by actuaries (insurance people).
I totally agree with Joe, I am an insurance agent looking out for the best interest of my clients. The amount of money spent on getting this pushed through our government should be looked at.
My personal feeling is that this is just another way for insurance companies to stop actually having to underwrite a risk. Basically taking the lazy way out.
Numbers and figures can be manipulated, and talking government into something like this is easy. Just show them bottom line numbers, pay them millions in soft money and poof Credit scoring is a OK! I know I’m simplifing the process, but am I wrong???I think history proves me right and that soft money makes our government go around!
Face it
It’s really a testis compression reflex
Anatomist,
The gerneric name for Kocher’s reflex is Testicular compression, leading to abdominal pair. So what is your point? Are you saying agents and thier clients are getting our testis pulled? My Dad used to say, when someone was lieing or tring to take advantage of him, “Right is right and wrong is wrong. If you are tinkling on my leg don’t tell its raining”
Goes the other way for the consumer protection. In order for an insurance company to live up to their commitments and pay their bills on time. Someone such as myself would not have the necessary paper work to prove by the insurance companies credit scoring methodology: is in fact a reliable source of information. In order to bring attention why my insurance rating score is what it is. Also, goes for the (3) major credit reporting agencies that these said insurance carrier’s failed to pay claims on and has since ended up as a negetive on my credit reports. Not to mention the repo of my car, every other compromise of credit standing. So, really what the “wise” Colorado Legislator’s probably meant was “what comes around goes around”.