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     | Wednesday, November 10, 1999 - 12:09 pm  My question is should insurance companies use my credit report to determine my insurance premiums on such items as Personal Auto Insurance, Homeowners Insurance, or simple Renters Insurance? What justifies this and what is my protection against an insurance company or the insurance industry from taking advanatage on such a subjective idea that is created to charge me more premium?
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| | Wednesday, November 10, 1999 - 12:46 pm Pulling a credit report for insurance purposes is specifically permitted by the Fair Credit Reporting Act ("FCRA"). Studies have been done that link certain credit information to a person's insurance risk. Credit and insurance are much alike in that everyone is charged a premium because of their risk. People who result in losses for the company they do business with either get cancelled or their premium gets raised. This is part of the natural order of things. The people who do not result in losses for the company subsidize the people who do result in losses. But where's the protection for the consumer, you ask. What if a company pulls my credit report and sees that I've got a bankruptcy or something and my insurance rate goes up? Your protection from gouging comes from competition. I suggest you get quotes from three companies, select the one that gives you the best quote and go from there.
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| | Thursday, November 11, 1999 - 07:17 pm Credit risk and insurance risk are two entirely different animals. Driving record and claims history should be the primary factor in rating auto insurance, not credit scoring. Should credit card companies run your Motor Vehicle Report and jack up your rate if you had 2 speeds and an at fault accident in the last 3 years? No, they shouldn't and credit scores should not be used to rate auto insurance! Statistics don't impress me one bit. They are very easy to manipulate. I work in the insurance industry and I see far too many instances in which people who have had no moving violations, accidents, or claims have to pay for "high risk" insurance, which is several hundred dollars more per year. I have seen people with "Excellent" or "Superior" scores file all sorts of claims in a one year period or do stupid, irresponsible things like wreck into their own garage or into a tree that's right in front of them on a bright sunny day! We're not talking bankruptcies, tax liens and judgements here. We're talking "too many finance company accounts", "date of last credit check too recent", "unfavorable balance on existing accounts, or balance UNKNOWN". Boycott insurance companies that use credit scoring. That's the best way to put a stop to it!
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| | Thursday, November 11, 1999 - 10:35 pm I agree, it is ridiculous, credit scoring serves no one but the bottom line of the companies offering it and the lazy credit grantors for a convenient fallback excuse "its out of our hands" One point "date of last credit check too recent" this would stand for too many inquiries (yeah anything over 2 in one year is too many and grounds for rejection!) or something else?
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| | Friday, November 12, 1999 - 04:19 am I've been hit with the "too many inquiries" problem. I'm trying to buy a house in an area that I just recently moved into. My credit report was pulled by the Power Company, Telephone Company, Apartment Rental Company, and by my new employer! All within about a months time frame. Well each one of these companies has issued me "credit", ie: I have a telephone, I have electricity, etc. But now when I'm trying to buy a new house in this area, I'm getting a low credit score due to "too many inquiries" too recently. What else is a person supposed to do when they relocate to a new area?
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| | Friday, November 12, 1999 - 08:19 am Boycott? First of all, if a company gives me a high price I'm going to go somewhere else. If it gives me a low price because I have an excellent FICO score or I can do the hokey-pokey better than anyone else I don't care why I just care that I got a low price. If credit scoring is so bad for insurance companies then those insurance companies will either eventually stop using it or go out of business. As for the increase in inquiries due to more and more people requesting credit information as inquiries become more and more prevalant the scoring models will adjust to compensate for it. Today four inquiries is considered a lot. Perhaps in 5 years 3 inquiries will seem normal and 6 inquiries will be too many.
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| | Saturday, November 13, 1999 - 12:37 pm Who said credit scoring is bad for insurance companies? It gives them a convenient opportunity to charge higher premiums. Credit scoring most often results in surcharges for low scores, rather than discounts for high scores. If you can get a good rate through a company that uses credit scoring, then that's good. But it doesn't change the fact that people who have no moving violations, accidents, or claims should not be forced into paying "high risk" insurance premiums. You could probably get a comparable rate through a company that does not use credit scoring.
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| | Sunday, November 14, 1999 - 08:10 am First of all no company needs an "excuse" or a "convenient opportunity" to charge whatever they want. It's a free country. If someone wants to charge $1.00 for insurance or $1,000,000,000.00 then good for them. However, if they don't charge enough everyone will want their service, but they won't make any money. And if they charge too much no one will want their service and they'll go out of business. Every company is trying to figure out the price that is neither too low nor too high and therefore results in the most overall profit for the company. No one is "forced" to pay high risk premiums because everyone has the simple option of not driving a motor vehicle. You could move to within walking distance of your work and just walk. Furthermore there must be thousands of companies out there that issue insurance. If you don't like the price from one, why not go to another? You spend so much time in your post talking about they shouldn't "force" you to pay high risk premiums but that's just a cover for what you really want. You want some government regulatory agency to force insurance companies to charge a price and use a system that you approve of. Who died and made you God?
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| | Sunday, November 14, 1999 - 10:54 am Come on Sean, people are entitled to opinions. I agree with you as far as supply, demand, and basic economics dictating that insurance companies abandon any inefficient system for determining premiums. But what happens if all insurance companies use the same system, because it is cheaper, if not better. If that happens, then there might not be an insurance company which charged a more reasonable rate, on more accurate criteria. So doesn't it depend on whether the thousands of insurance companies are related in some way or use the same risk models? I don't really understand the nexus between credit and insurance risk. Barbara already raised this in the Nov 11 post. But nobody answered or explained it. At least I can understand the logic behind inquiries being a black mark for potential loan defaults, but how do inquiries relate to insurance? Does empirical data show that people with bad credit engage in insurance fraud? I recently applied for health insurance, and it was important that they know if I smoked cigarettes or ever filed bankruptcy. Does the surgeon general recognize that bankruptcy causes lung cancer? What kind of warped reasoning relates those 2 animals? I would support creditor scoring in insurance if someone could explain the logic behind it.
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| | Sunday, November 14, 1999 - 07:52 pm Sean, Auto insurance is not credit. People who purchase auto insurance are not applying for loans. Credit risk and auto insurance risk are two separate things. Do you think that a person's credit card rate should be affected by what is on his/her Motor Vehicle Report? Do you think a doctor should run an EEG to determine a patient's risk for osteoporosis? Do you think a person with a 780 Fico score should be rejected because s/he scored 20 on the ACT? Do you think a law school applicant should be required to pass the MCAT? Everything has its place. Credit scoring has no place in automobile insurance underwriting any more than Motor Vehicle Reports have a place in mortgage underwriting. People who have proven that they are responsible drivers should receive auto insurance rates based on that fact. Whether or not they qualify for a Platinum Visa is irrelevant. I'm not trying to "cover" anything. Yes, I think the government should prohibit the use of credit scoring for auto insurance. Yes, I think that when corporate greed gets out of hand, intervention is called for. I don't care about corporate profit. I care about what is right and what is wrong. My concern is with what is logical and fair, and not with what brings the greatest profits. I have the right to express my opinion, even though it is different from your own. Your question "Who died and made you God?" is highly inappropriate and does nothing to advance your point of view.
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| | Monday, November 15, 1999 - 05:04 am Do I think a person's credit risk rating should be affected by their driving record? Yes, of course I do. Don't you? You can't imagine a situation where a person who drives poorly might get into an accident, be underinsured and lose a few days or a week at work? You can't imagine that the loss of time might affect his ability to repay his credit obligations? I think Experian should combine their credit information with driving record information and produce an emperically derived and statistically validated model that factors all these things together. Now questions for you: You both claim and complain that credit scoring factors in your age although the generic models produced by the three credit bureaus under Fair Isaac's auspices do not. Yet you make no cries of anguish over the fact that male drivers under age 25 will be charged higher rates than female drivers over the age of 25 even with the same driving record. Some people might consider that age and gender discrimination (not me, but some people). You talk so much about insurance pricing, yet you haven't mentioned that? Don't you care about what is right and what is wrong? I'll tell you what's right -- freedom is right. I don't want to see you force people to act as you think is proper because that's wrong.
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| | Monday, November 15, 1999 - 07:42 am The topic of this thread is credit scoring for insurance.
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| | Monday, November 15, 1999 - 08:34 am http://www.equifax.com/about/news_releases/march96/cls03.html
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| | Monday, November 15, 1999 - 09:39 am I visited the site Sean provided and it still doesn't explain the correlation between credit and insurance risk. It just says that a correlation exists. Even though my credit is near perfect and my insurance is low, I find that troublesome. I don't ask for the exact formulas used in calculating insurance risk. I don't ask how to manipulate insurance premiums. I am only asking what possible relationship there is. WHen I ask loan officers about why inquiries, etc matter to them, they can explain it. The explanations make sense and I accept that these factors should be considered. When I ask insurance people why they consider bankruptcies and credit, they have no clue. I do feel that age should be considered in both credit and insurance, but there is some logic to that. Sean, your example, if I understand it correctly, is that a person who gets into auto accidents might lose time from work and get into debt. Well, that is sort of speculative and remote. And it doesn't answer the question. Your example shows that insurance risk should be calculated into credit. It does NOT show that credit scoring should be calculated into insurance. I hope that it does not seem like you are being attacked here. You seem to have the answer to every question, which makes you the target of this difficult one. If your answer is simply that you don't know what the possible correlation is, then that is fine. But that is not what you appear to be saying.
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| | Monday, November 15, 1999 - 02:33 pm Of course people's driving sucks when they've just been turned down for their home loan because their credit score is low and they have no clue why because they've always paid their bills on time. However, I think we REALLY need to monitor their "domestic" lives. Last time I had an argument with my ex, I ran a red light. And when my mother was dying, I cried just about every time I was in the car alone, for several weeks. So I conclude, we MUST contact the neighbors to see what's going on in people's lives. Any kind of stress greatly increases the chances of an accident. Oh yeah, we got to contact the employers too, see how they're doing at work. I think they already get the medical records, so anyone diagnosed with cancer or any life threatening disease shouldn't be allowed to drive at all, they're obviously under stress. 1999 finally became 1984. I don't need any part of it, and I'm very fortunate that I don't have to put up with that BS. A lot of people are lucky they lived despite of my irate driving when my clients couldn't get loans because creditors reported lies about them. I should probably pay $100,000 a year to Allstate. I think about this stuff while I drive. Watch out if you're between Cottonwood and Vegas tonite, I'm off to Comdex :) Christine
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| | Monday, November 15, 1999 - 03:04 pm Credit risk scores measure something. To be certain they take into account a certain statistical risk that a person may be injured and be unable to work or may get fired or whatever but these risks plague us all. A person with a high score, for the most part, has the same risk of job loss as a person with a low score. One of the things credit scores measure is how risk-adverse a person is. Is a person willing to max out a credit card knowing that he might lose his job, or that he might have alternator problems and need to buy a new one this month? Some people wouldn't. They just wouldn't feel comfortable unless they knew they had a "nest egg" to fall back on in the form of available credit. Others would -- they'd take the risk and trust on not getting burned. Now take someone with a "risk-is-ok" attitude and put him on the road. How fast is safe to go in the rain? Some people would say in the rain no faster than 50, but some people go 80+ mph rain or shine. Credit risk models are not like driver's risk models. It's not like they pull a standard FICO score on you and say "You scored under 620 because of too many inquiries, you don't get insured." But on the other hand those people that want insurance to only include tickets and accidents are out to lunch. That's would be like making a rule that only being 30 days late can be considered on a credit score. Insurance risk models are about measuring how "risk adverse" you are.
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| | Monday, November 15, 1999 - 04:09 pm Christine, that was REALLY funny. Hey Barbara, I have to admit to being slow on picking up on sarcasm. But I got THAT. Sean, that is really an interesting theory. It sort of holds water, but is it your theory, or is it the stated justification given by FICO? I'm really asking. It would not do to get creative and try to rationalize FICO's conduct. Even though it makes a little bit of sense. The reasoning is not as linear and direct as the reasoning behind inquiries, etc. I was only kidding when I suggested that FICO feels that people with bad credit might fabricate an insurance loss for money, but that reason has the same feeling of a sophistry. It sounds more creative than factual. Just my opinion. If the insurance companies feel that way about risk aversion, wouldn't they give discounts not only for non-smokers, but also for non-skydivers, non-scuba-divers, etc. What if a pilot or cop needs car insurance? A person's CHOICE of those vocations or avocations would seem to more directly indicate a person's LIFESTYLE risk aversion with respect to harming their bodies (or the steel cages around them). Yet insurance companies don't ask those questions. Why would a person's risk aversion with his wallet be used to relate to risk aversion with the body? If it were related, wouldn't it be important for insurance companies to ask if we're gamblers? I'm not saying that FICO doesn't feel this way. But if they do, I question their empirical research.
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| | Monday, November 15, 1999 - 07:17 pm Sean wrote: "those people that want insurance to only include tickets and accidents are out to lunch. That's (sp) would be like making a rule that only being 30 days late can be considered on a credit report." No. That would be like making a rule that only credit related information can be considered on a credit score. Voigtkampff made an excellent point. There is a big difference between taking risks with the body and taking risks with the wallet. Sean wrote: "Credit risk models are not like driver's risk models." Yes, they are. The same reasons are given when a person is rejected or uprated for auto insurance: "date of last credit check too recent, or date unknown", "unfavorable balance owed on accounts", "insufficient length of credit history", "too many finance company accounts", etc. All the reasons are related to credit, not to driving. Sean wrote: "No one is 'forced' to pay high risk premiums because everyone has the simple option of not driving a motor vehicle. You could move to within walking distance of your work." Say what? If a person with a clean driving record can't afford to pay an unjustified surcharge, then s/he can just pack up, move, and start hoofing it to work? Sorry, but I disagree. I'm "out to lunch"? Okay, I'll have a California Club on rye with a side of chips and a Sprite.
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| | Tuesday, November 16, 1999 - 07:37 am voigtkampff: What I stated above is just a theory and it's my own personal theory and it may be completely and totally wrong. It's just my way of trying to make sense out of the situation and put it into a framework that I can understand and accept. Barbara: I can't say what the codes are on the casualty loss score, but I just put a call into Fair Isaac and they're faxing that stuff over to me right now and I'll soon know whether you're right or just talking through your hat again. You claim that "There is a big difference between taking risks with the body and taking risks with the wallet." You are assuming that people view accidents as a body risk but is that what it really is? For most people an accident means they pay their $500.00 deductible and, if they're lucky, the car is totalled and they get a new one. For most people the reason they slow down is not because they think they're going to get in an accident and get killed but because they think they spotted a black-and-white up ahead in the #3 lane and they don't want to pay the $271.00 involved with a speeding ticket. Driving risks are esteemed, by most people, to be financial risks. The risk of a ticket. The risk of having to pay a deductible. The risk of your insurance rate going up. Not risk of horrible violence done to their bodies. Christine: You're right that insurance could maybe be made both more efficient and more fair by a thorough invasion of people's lives. A minor invasion might be placing a monitoring device inside the person's vehicle that records the amount of time they spend every day driving over the speed limit. A major invasion might be a positive-vetting background check of their life. However, that's kind of expensive. Considering that Equifax Insurance Services already has massive amounts of information available at its fingertips about persons it is natural that they should wonder if a statistical correlation between the information they have and a person's likelihood for an accident can be established. Thanks to Fair, Isaac & Company, Inc. that correlation has been established. No one can say for sure why the correlation exists anymore than anyone can say for sure why when the stock market goes up that women's skirts get shorter. All we know is that Fair Isaac has created an emperically derived, statistically validated model that accurately predicts accident risk for groups of people who share the same or similar traits.
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| | Tuesday, November 16, 1999 - 09:15 am Sean, I don't think much of people, but even I feel that most drivers acknowledge the physical risks of driving recklessly. You are a correct that drivers perceive it as a financial risk. But not exclusively, or even primarily. When I was a teenager hopping into my Supra on a dark, rainy night my parents never yelled out "Drive carefully Voigtkampff, your premiums are too high and we don't need the points." OK they did, but I'm seeking therapy about that. I assume that everyone knows someone who is dead from a vehicular accident. I don't need statistics. I've been to the funerals. If drivers don't have the misfortune of that knowledge, they've heard of the friend of a friend. A reasonable assumption I hope we can agree. Here is an awful example. I'm financially risk averse. If my girlfriend wants us BOTH to go skydiving, the very great expense will deter me. If she gets a free suicide attempt for 2, I still won't go because the physical risk exists independently of the financial risk. The insurance company would not be correct in assuming that after I get few credit inquiries, Voigtkampff Knieval (not my real name) is going to don a star spangled jumpsuit (a gift) and look for canyons. You might be giving the insurance companies too much credit (no pun intended). Maybe they don't have a reason for relying on FICO scores. On the other hand, if they artifically increase the premiums, don't they have to return the excess to the insured at the end of the year? State Farm always gives a refund check of about $20 each year. (Enough for the jumpsuit installments).
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| | Wednesday, November 17, 1999 - 08:50 am I am pleased to say I have information from Fair, Isaac, the producer of the Casualty Loss Score ("CLS") used by Equifax. The most important factors affecting your score are as follows: Outstanding debt, Length of credit history, Late payments, collections and bankruptcies, New applications for credit, and types of credit in use. Things not considered: Ethnic group, Religion, Gender, Marital Status, Nationality, Age, Income, and Address. Fair Isaac also claims that "Independent tests by insurance companies and a major consulting firm compared Insurance Bureau Scores against the claims history of policy holders." (emphasis added) and I have a call in to determine exactly who this independent consulting firm is and how I can get a copy of their research.
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| | Wednesday, November 17, 1999 - 12:53 pm I don't see the need for insurance cos. to pull anyone's credit either. Has NO bearance on the risk they take when insuring anyone. If you don't make payments, then guess what, you're cancelled. Simple as that.
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| | Wednesday, November 17, 1999 - 01:58 pm Sean, why are you so pleased? You just found out that you are the one who was "talking therough his hat". You just confirmed what I said before-- that "Insurance" scores are nothing more than credit scores. All of the reasons are about credit. None of the reasons are about driving or claim history. What I find particularly nauseating is that the credit score takes precedence over driving and claim history. If an applicant's credit score is too low, the report comes back saying "Ineligible for all programs. MVR and CLUE will not be ordered." The applicant's MVR (motor vehicle report) and CLUE (loss report) will not be considered at all. The credit score is the bottom line. Sean wrote: "You are assuming that people view accidents as a body risk but is that really what it is?... Driving risks are esteemed, by most people, to be financial risks." What statistics are you citing here? If most people are more concerned about the financial risk of accidents, then why do vehicle advertisements appeal to the consumer's aversion to bodily injury when they talk about safety features? People buy vehicles with safety features to protect themselves, not the vehicle. Voigtkampff's distinction between bodily risk and financial risk still makes perfect sense. Just because a person is approaching the limit on his credit card does not mean he is a reckless daredevil. Age is not used in credit scoring? Follow these links: The OCC the FTC
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| | Wednesday, November 17, 1999 - 05:16 pm Back in college I studied Skinnerian Psychology (B.F. Skinner), which noted that rats lost the will to live and actually died without physiological, medical cause once they realized (in a clinical environment) that they had no control of their environment. I feel like a rat. No matter how carefully I drive, no matter how little I speed, no matter what I do to reduce the ACTUAL risk to my automotive insurer - I cannot fully control my ability to get insurance or my insurance premium. I accept Sean's cite. But it sure is depressing.
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| | Wednesday, November 17, 1999 - 09:03 pm Voigtkampff: True, we don't have complete control over our environment. If we drive carefully and don't speed, something could still go wrong, but the risk of an accident is much less than it would be if we drove 85 mph, drove under the influence, or ignored traffic signs. Although we don't have total control, we do have the ability to minimize the risk by driving responsibly. When you say that you accept Sean's cite, do you mean the last one about people being more concerned about financial risk than physical risk when it comes to auto accidents?
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| | Thursday, November 18, 1999 - 05:29 am No I mean that I finally accept that insurance companies do rely on FICO scoring. I am a skeptic and don't accept things unless they are truly consensually validated OR I see proof. I believe that everything makes sense or is intended to make sense. So the idea of using credit scoring for insurance rating seemed so completely stupid that I would not accept it. That is what is depressing. Further proof that the world does not make sense. I would be happier if someone could explain the social or psychological dynamic the insurance companies BELIEVE leads FICO to be a predictor of insurance risk. I still disagree with Sean's contention that people are more concerned about financial than physical risk. Just off the top of my head I can think of 3 friends killed in different motor vehicle accidents. I also know several who were never injured in accidents, but were somewhat traumatized by accidents that they were involved in; it took them time to get over the fear well enough to drive again. And I am young (in my 30s) and I know that many people who evidence the physical risks. And every one of these dead or frightened people with empirical knowledge of the risks, has given vicarious knowledge to all the people who know or knew them. Sean's theory was interesting, and it really stopped me dead for a while, and I admit that I am still thinking about it, but he has not pursued it.
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| | Thursday, November 18, 1999 - 12:51 pm Barbara: Your claim that CLS scores are just FICO scores is based on nothing. Are you privy to the formulae? Do you even know the score range of the CLS score and what numbers are considered acceptable? If you do, you certainly haven't posted anything to that extent. voigtkampff: I'm glad you're at least willing to consider my theory. I think CLS scores measure two things: 1. A person's willingness to take risks, and, 2. A person's ability to learn from their mistakes. When we look at a person's credit information and see that two years ago all their credit cards were maxed and they had delinquencies but now they are keeping their balances reasonable we would conclude that they had a bad past and learned from their mistakes. Kind of like bankruptcy isn't the kiss of death in some cases it can be a very positive new beginning armed with more wisdom. Similarly a person who has proven on his credit that he learned from past mistakes might be excused over an accident or ticket he had a year ago under the theory that he might've responded to that experience in the same way. A "once-bitten-twice-shy" kind of person. We can't always know what the cause and effect of all these things are. We develop theories and then we test them and either keep the theory or discard it. I was listening to a guy on the radio this morning talking about aliens and UFO's and he basically came right out and said, "I wouldn't believe in aliens if one was gnawing on my leg." Well let me tell you, I don't believe in aliens but if one gnawed on my leg I'd fix my opinion right quick. It's the same thing that when I present the following link to some people (http://archinte.ama-assn.org/issues/v159n19/full/ioi90043.html) they deny the possibilities. I'm not here to be the authortative word on anything, I'm just here to keep an open mind and point out that the best information we have shows that SCORING WORKS.
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| | Thursday, November 18, 1999 - 06:57 pm Sean Wrote: "Your claim that CLS scores are just FICO scores is based on nothing." Your tactic to discredit what I said is based on nothing. I did not say that CLS scores are just FICO scores. I said that "insurance" scores are nothing more than credit scores. You have still failed to prove otherwise. Sean wrote: "Do you even know the score range of the CLS score and what numbers are considered acceptable? If you do you certainly haven't posted anything to that effect." Sean, do you even know the score range of the CLS score and what numbers are considered acceptable?... If you do, then why haven't you posted anything and why are you asking me? Here is the information Sean is seeking: >605, 605-646, 647-677, 678-703, 704-720, 721-735, 736-755, >755 What numbers are considered acceptable? Whatever is profitable, of course. 736 and above. Sean, there is only so much you can dish out before it comes flying right back at you. You have already been advised 3 times by 3 different people. If you can't learn to present your arguments in a reasonable and civilized manner, prepare to receive a mega dose of your own medicine.
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| | Thursday, November 18, 1999 - 07:47 pm What in the world were you doing researching the relationship between prayer and coronary disease? I'm not going to make any jokes on the fear that someone you know is ill. Pleasure reading? In my website I tell people to stop whining about credit scoring, that it's here to stay. And that it makes sense that it stays, UNTIL something better comes along. I prefer learning how to operate within (or manipulate) the system, to fighting the pro-FICO lobby. In sum, I generally agree with you. I feel that I'm moderate or even conservative in my views, but this insurance thing bothers me a lot. While there may be some relationship between credit scores and reckless drivers, that relationship seems like the kind of thing that should stay in a psychology theory class. It's small relationship, and NOT enough to make it the primary factor. Was it Barbara who pointed out that an insurer will not even look at a driving record if the credit score is too low? Come on!!! Please, be a human and admit that's ridiculous. Could you imagine me asking a doctor if I was at risk of having a heart attack. So she had to PREDICT actual risk based on information available. Imagine the doctor ignores my DOCUMENTED past history of heart attacks, and does not even consider it. Because before she will even consider it, she must first determine if my candy bar intake warrants the further inquiry. (Empirical studies show that there may be a link between caramel and heart attacks but doctors are not sure and they have only tentative theories. Subsequent studies may disprove the apparent link, and new theories may replace the existing one.) So we never look at the actual DIRECT evidence of past risk. Because a heoretical INDIRECT precursor does not allow that inquiry. This might seem offensively facetious. But think about it. Where does the analogy fail? (If it does, bear in mind that I came up with it very quickly while I was eating a reeses, which does not have caramel, but should). I saw a study that showed that people who are into jazz and firearms are more sexually active (Men's Health magazine). These correlations between obviously unrelated things are interesting and fun to bring up at parties, while you're cleaning a Colt to the tune of sax music. And maybe as long as there is empirical support, the correlations should be calculated into formulas. But they should not be important or the most important factor in that formula, let alone be the gate keeper. I defer to you only because the empirical data supports a correlation. But I think that more studies are needed. It's ironic that you cite a medical article (and I know that I'm taking you out of context) because this reliance on credit scoring for insurance has the same FEELING to me as the here-today-gone-tomorrow medical theories. (Egg whites are good, no wait, yolks are good.) I know that we can't always have the cause and effect. But in this case I FEEL that we can. I'm going to ask the insurance underwriters directly. There must be a site somewhere. I'll revisit this issue is a few weeks, when I have some information.
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| | Friday, November 19, 1999 - 05:35 am I like jazz. And, I love a good yolk.
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| | Friday, November 19, 1999 - 12:55 pm The Study That Started It All: The sample was comprised of 250,000 insureds. 10 score ranges were used. Here is a comparison of the insurance performance of 25,000 people whose credit scores were below 620 and 25,000 people whose credit scores were above 849. The study showed that on average 10.8% of the low scorers filed claims, as opposed to 5.3% of the high scorers. In other words, the low scorers filed over twice as many claims as the high scorers! The study was statistically validated and the results can not be disputed. Yes, there is a proven correlation between credit scores and claims frequency. Have I managed to convince all of you that credit scoring for auto insurance is justified? If you are convinced, can you help me answer the following questions: 1. Why should 89.2% of a group be penalized for the actions of a small minority within that group? 2. Why should 1325 of the high scorers get a free ride at the expense of 22,300 low scorers?
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| | Sunday, August 27, 2000 - 01:13 pm Let's get practical. Name an insurance company that will offer homeowner's or auto insurance that won't run a credit check. I have just been informed that my renters insurance rates have been adjusted upwards due to my chapter 7 discharged a year ago and that they may even cancel coverage. I haven't made any claims. BTW, it's Metropolitan. Snoopy. I don't recommend them. Any suggestions?
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| | Sunday, August 27, 2000 - 04:25 pm Any Canadian insurance co. that I have dealt with does NOT credit check. The relationship between scoring and insurance is utterly absurd.
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| | Thursday, September 07, 2000 - 08:23 am Is that canadian doing business in the USA? Can you name a few?
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