Washington doens’t need to stremline the system, voters elected Mikey to take care of Washington’s interests in insurance matters, putting local agents out of the loop by streamlining out of state agents in sounds like mikey is cow towing to Obama and the liberal parties subliminal wishes. As far as cleaning up the technical glitches in administration of Insurance laws, it seems like Mikies administration does that by not prosecuting fraud, theft, co-mingling. Suggestion, make it harder for the insurers who throw agents at the wall to see who stays for a bit without supervising their ethics or integrity. (read farmers)
Finally we have an Insurance Administrator that understands how inherently unfair the use of credit scoring is and is willing to do something about it. There are so many reasons why this is so but principally the information credit reporting agencies have is most often flawed and impossible to fix. Kudo’s to the WA Dept. of Insurance.
With a little diligence a credit report can be cleaned up quite nicely. The information is out there and freely available.
I also use a monitoring service, so I am notified immediately about unusual activity, address change requests, new accounts, any derogatory information etc.
This way you not only get a copy of your current report from all three reporting bureaus but you are able to track every change to those reports on a real time basis.
And I personally have never suffered any ill effects of credit scoring. Granted, I pay my bills on time and am not overextended (and I also have never filed a property or auto claim against my carrier- funny how that works…). But I have most often encountered credit scoring in the marketplace as an avenue for obtaining additional benefits- whether that be from entities like utility companies (no deposits), insurance companies (premium discounts), or banks (lower rates, better terms).
If Washington wants to ban credit scoring that is their prerogative, but in my opinion it will have the effect of subsidizing rates for higher risk pools at the expense of the lower risk pools.
Maybe there is a middle ground whereby credit scoring could be used to evaluate and price insurance risk but subject to statutory minimum/maximum deviations. So you’d still end up subsidizing certain risk pools but only to a point.
With all due respect to the posters who know their own good credit scores, can you also think of the TENS OF MILLIONS whose credit scores have been impaired through no fault of their own?
Not just loss of employment, but the very widespread reduction of credit limits results in a lower credit score, and hence a lower insurance score.
Here are full details AND some letters to fight windfall increases in auto rates if you suffered an unwarranted decrease in your credit score.
Credit scoring is should be benned but not because of any economic crisis. There is no real realtionship between a credit score and one’s driving. It may be true that as a group people with low credit scores have greater frequency (I don’t know) but that is a casual relationship. I am sure it is true that most accidents are caused by people weighing between 150-200 lbs. but that is also just a casual relationship.
A millionaire who has a good driving record that just went bankrupt probably does not instantly become a careless driver.
Bob, does it matter to you at all that all studies indicate a correlation between claims and credit scoring? Of course not, because this doesn’t seem fair. Insurance companies need to charge rates reflective of the exposure and this procedure has a very strong correlation.
Your credit score is not the same as what is used by your insurance company. Insurance scores are based on credit, but do not use all the same factors as your FICO credit score. This is because they only use what is actually correlated to losses. As such, most peoples’ insurance scores would not change based on credit limit decreases, but would change based on unpaid bills. People who don’t pay their bills are more likely to make a claim, or inflate a claim. And with the economic crisis, people who are over-extended have more incentive to intentionally cause losses to get the money.
Also, while credit bureau information does contain errors, all data does. This includes motor vehicle records, which contain your driving history. People say to use your driving habits, but the data is just as prone to error. Companies try to use all available information to sort the good risks from the bad. This is just good business.
So credit scoring is “unfair”. Have any data that shows this or is it just an emotional issue with you. You don’t “think” it has anything to do with driving behavior but you really couldn’t prove it could you? On the other hand, insurance companies have been compiling this data (and paying to defend it’s use) for a long time. Must be some data to support it don’t you think? Here’s the short answer to credit and don’t forget it: There are some people with bad credit that don’t necessarily create/cause/inflate claims but they are the exception and insurance companies don’t price their products based on “exceptions”, they base their rates on the characteristics of large homogeneous groups. There are large groups of people that have created their own credit problems,their “financial” lives are in a shambles, and they don’t adhere to the promissory notes they signed and agreed to. They treat their own vehicles, insurance companies, and other drivers on the road the same way eaxct way. That’s why they pay more. Oh, but it’s so unfair.
SWFL your post is nicely written, and I will try to do it justice. Credit Scoring has been abused by the banks, lenders, and credit card companies. In a perfect world it might work, but currently our economy, is like a dog chasing it’s tail. Unfortunate foreclosures, and medical bills have raised scores, and credit card companies are charging 30%, we are in a hole and will never get out. I am licensed in 7 states, and only one does not allow credit scoring California, which use to be one of most expensive places to insure, not anymore. My rates in Metro areas in CALI are less expensive than rural Washington. The consumer is not winning, and insurance companies are tweeking the rates like crazy, just like in the early days of using credit scoring for loans. SWFL again great post, but it’s not real, CS has doubled some people’s rates and they will be forced eventually to be unisured, that’s when the dog casing the tail gets even faster.
Washington doens’t need to stremline the system, voters elected Mikey to take care of Washington’s interests in insurance matters, putting local agents out of the loop by streamlining out of state agents in sounds like mikey is cow towing to Obama and the liberal parties subliminal wishes. As far as cleaning up the technical glitches in administration of Insurance laws, it seems like Mikies administration does that by not prosecuting fraud, theft, co-mingling. Suggestion, make it harder for the insurers who throw agents at the wall to see who stays for a bit without supervising their ethics or integrity. (read farmers)
Finally we have an Insurance Administrator that understands how inherently unfair the use of credit scoring is and is willing to do something about it. There are so many reasons why this is so but principally the information credit reporting agencies have is most often flawed and impossible to fix. Kudo’s to the WA Dept. of Insurance.
Most people benefit from credit scoring and a recent ballot measure in Oregon confirms this.
The vocal few with poor credit find partners with politicians who also can not contain their spending habits.
With a little diligence a credit report can be cleaned up quite nicely. The information is out there and freely available.
I also use a monitoring service, so I am notified immediately about unusual activity, address change requests, new accounts, any derogatory information etc.
This way you not only get a copy of your current report from all three reporting bureaus but you are able to track every change to those reports on a real time basis.
And I personally have never suffered any ill effects of credit scoring. Granted, I pay my bills on time and am not overextended (and I also have never filed a property or auto claim against my carrier- funny how that works…). But I have most often encountered credit scoring in the marketplace as an avenue for obtaining additional benefits- whether that be from entities like utility companies (no deposits), insurance companies (premium discounts), or banks (lower rates, better terms).
If Washington wants to ban credit scoring that is their prerogative, but in my opinion it will have the effect of subsidizing rates for higher risk pools at the expense of the lower risk pools.
Maybe there is a middle ground whereby credit scoring could be used to evaluate and price insurance risk but subject to statutory minimum/maximum deviations. So you’d still end up subsidizing certain risk pools but only to a point.
I agree with Matt on everything until the last paragraph.
People in the lower risk pool have no obligation to subsidize the higher risk pool.
A better approach might be to provide some sort of exception for people who incur medical catastrophes.
Courageous & Much-Needed Action!
With all due respect to the posters who know their own good credit scores, can you also think of the TENS OF MILLIONS whose credit scores have been impaired through no fault of their own?
Not just loss of employment, but the very widespread reduction of credit limits results in a lower credit score, and hence a lower insurance score.
Here are full details AND some letters to fight windfall increases in auto rates if you suffered an unwarranted decrease in your credit score.
http://www.settlementcentral.com/page0469.htm
An attorney ad. How surprising. The new ambulance chasers. I think it’s so unbelieveably funny that they see themselves as some kind of heros.
Credit scoring is should be benned but not because of any economic crisis. There is no real realtionship between a credit score and one’s driving. It may be true that as a group people with low credit scores have greater frequency (I don’t know) but that is a casual relationship. I am sure it is true that most accidents are caused by people weighing between 150-200 lbs. but that is also just a casual relationship.
A millionaire who has a good driving record that just went bankrupt probably does not instantly become a careless driver.
Bob, does it matter to you at all that all studies indicate a correlation between claims and credit scoring? Of course not, because this doesn’t seem fair. Insurance companies need to charge rates reflective of the exposure and this procedure has a very strong correlation.
Your credit score is not the same as what is used by your insurance company. Insurance scores are based on credit, but do not use all the same factors as your FICO credit score. This is because they only use what is actually correlated to losses. As such, most peoples’ insurance scores would not change based on credit limit decreases, but would change based on unpaid bills. People who don’t pay their bills are more likely to make a claim, or inflate a claim. And with the economic crisis, people who are over-extended have more incentive to intentionally cause losses to get the money.
Also, while credit bureau information does contain errors, all data does. This includes motor vehicle records, which contain your driving history. People say to use your driving habits, but the data is just as prone to error. Companies try to use all available information to sort the good risks from the bad. This is just good business.
So credit scoring is “unfair”. Have any data that shows this or is it just an emotional issue with you. You don’t “think” it has anything to do with driving behavior but you really couldn’t prove it could you? On the other hand, insurance companies have been compiling this data (and paying to defend it’s use) for a long time. Must be some data to support it don’t you think? Here’s the short answer to credit and don’t forget it: There are some people with bad credit that don’t necessarily create/cause/inflate claims but they are the exception and insurance companies don’t price their products based on “exceptions”, they base their rates on the characteristics of large homogeneous groups. There are large groups of people that have created their own credit problems,their “financial” lives are in a shambles, and they don’t adhere to the promissory notes they signed and agreed to. They treat their own vehicles, insurance companies, and other drivers on the road the same way eaxct way. That’s why they pay more. Oh, but it’s so unfair.
SWFL your post is nicely written, and I will try to do it justice. Credit Scoring has been abused by the banks, lenders, and credit card companies. In a perfect world it might work, but currently our economy, is like a dog chasing it’s tail. Unfortunate foreclosures, and medical bills have raised scores, and credit card companies are charging 30%, we are in a hole and will never get out. I am licensed in 7 states, and only one does not allow credit scoring California, which use to be one of most expensive places to insure, not anymore. My rates in Metro areas in CALI are less expensive than rural Washington. The consumer is not winning, and insurance companies are tweeking the rates like crazy, just like in the early days of using credit scoring for loans. SWFL again great post, but it’s not real, CS has doubled some people’s rates and they will be forced eventually to be unisured, that’s when the dog casing the tail gets even faster.