Credit Rating impacts on Car Insurance Rates - Page 4

Mothertrucker · ‎01-30-2015

@Lucky Charm wrote:
@AngusandBuddhasMom wrote:
For the past 20 plus years company's have used credit reports for hiring prospective candidates.
True.

I always thought that they should also pull driving records of those in the auto insurance business.

I knew a handful in underwriting, actuarial, and compliance that had dui's.

Who is "they"? I know in my industry, I have to be licensed, and could not be if I had a DUI....

momtochloe · ‎11-03-2013

@Bird mama wrote:
I have an excellent credit rating and my no fault on my old car dropped
$40 from the last 6 month period to the upcoming period. That said, even though my credit rating benefitted this experience, I still think it's stupid.

@Mominohio
Your Ma and I need to have a cup of coffee - I agree with her.

birdmama, may I ask who your insurer is please? I would love for my rates to drop . . .

WenGirl42 · ‎07-05-2012

@guatmum wrote:
@WenGirl42 wrote:
@missy1 wrote:
@WenGirl42 wrote:
@AngusandBuddhasMom wrote:
@missy1 wrote:
IMO they don't go hand in hand. You could have a high credit score when starting the policy, and then go to a low rating. (due to medical bills etc.) My insurance never checked my scores, neither have my employers. Most people would pay their car insurance, before a credit card/etc. Poor credit score, doesn't mean more accidents.
Not always but it does give them an idea of how you pay your bills.
Actually, across the population (which is how statistics are determined), yes poor credit score DOES mean more accidents.

Maybe those findings are because more people have poor credit scores than not.???
No...that's not how statistics work. Actuarial or otherwise. All other things being equal, people with a lower credit score are more likely to get into accidents or have the accidents they do get into cost more (either way, be a worse risk for the insurance company) than people with a higher credit score. Same could be said for people who live in one state vs. another, are single vs. married, drive one type of car vs. another...the list of segmentation options that insurance companies have is quite long, and these are all factors that determine an individual's rate.
Please cite your source for the above bolded segment of your comment. I'd love to see reliable, long-term, valid statistics that prove it.

ETA: Please don't cite actuarial statistics about single people as a population v. married. They count anyone over the age of 18 as an adult. In doing so, they include in the "single" category a disproportionate amount of under 25 single v. the married group. This makes the average age and experience of the "single" group MUCH lower than that of the married group. The statistics on "singles" has little to do with anyone over the age of 30 who is single yet those statistics are used anyway. It's easy to see that, rather than marital status, it's age and experience of the driver that makes the difference. Unfortunately, insurance companies have no incentive to think that logically about it. I'm sure the same kind of analysis can be made with the statistics on those with high credit scores v lower credit scores but that would take some thought and intelligence, which insurance companies don't find beneficial to their bottom line. That's one of the big reasons I changed my profession.

Age and experience are accounted for separately in risk analysis. Every variable is considered separately and in combination with every other variable (to account for interaction effects). The married/single difference is separate from both age and experience for insurance pricing purposes. Having analyzed and reviewed the data myself as part of a professional credential and a former job, I can vouch for its statistical significance and soundness. I'm not researching publicly available data/studies for you though...if you're that curious, you can find them yourself. That's if they even exist, since I expect most actuarial companies are not publishing the results of the analyses they complete for their clients.

Insurance companies have *every* incentive to think logically about it. If they haven't factored in something about you that either makes you more or less risky, the rate they offer you will either be too low or too high for you as an individual. And they lose money on both of those cases. That's why you're seeing a trend towards individualized insurance pricing (using in-car electronic devices to track driving habits). Then nobody has to subsidize anyone else or suffer for anyone else's less desirable characteristics.

guatmum · ‎03-11-2010

WenGirl, I still get a hit for my marital status. Yes, I may get a well deserved break because of age/experience but I still get a negative hit for being single that someone in my exact life situation but who was married wouldn't get - a hit based on a "single" population that has been skewed. That is ridiculous - again, that is also why I got out of the insurance underwriting profession. And insurance companies have EVERY reason not to be too thoughtful about how they fix the premiums. The actuarial evaluations are apparently not made public and so it takes lawmakers to reign them in. Sad.

mstyrion 1 · ‎09-18-2014

@Mothertrucker wrote:
@Lucky Charm wrote:
@AngusandBuddhasMom wrote:
For the past 20 plus years company's have used credit reports for hiring prospective candidates.
True.

I always thought that they should also pull driving records of those in the auto insurance business.

I knew a handful in underwriting, actuarial, and compliance that had dui's.
Who is "they"? I know in my industry, I have to be licensed, and could not be if I had a DUI....

________________________________________________________

Good question Mothertrucker.

I was in the auto insurance business for many years and a DUI could get you fired or demoted. Not to mention, you had to be able to drive to do part of the job.

Lucky Charm,

Are you saying that those employed in the auto insurance business somehow get a pass on having background checks or regularly scheduled driving records checks?

~Enough is enough~

DiAnne · ‎09-22-2010

I did not read this whole thread so I am probaby repeating what someone else wrote. They figure people who pay their bills are more responsible than people who do not pay their bills.....

esmeraldagooch · ‎03-10-2010

Employers can and do look at your credit before hiring also.

Bird mama · ‎03-12-2010

Just for grinnies, I called my insurance agent and asked about the credit score thing. He swears that he received the same generic blurb about it that I did. I'm allowed to have a copy of the information provided to State Farm and I went online with the reporting company and requested a copy. Now, I am on a mission to find out what my customer rating index means.

There are many elements: wind, fire, water
But none quite like the element of surprise

justathought · ‎11-05-2012

So if someone has bad credit that means they will drive like a nut?

Or burn their house down?

Lipstickdiva · ‎03-10-2010

If I sat down and added up all the money I've paid in insurance premiums on our vehicles, motorcycle, boat and houses, I'd probably make myself sick.

Insurance has got to be one of the biggest rip-offs going. You pay them premium after premium, year after year but many times, as soon as you make a claim, they drop you.

Even calling an insurance company about a potential claim is recorded and you could have a problem. But it's a necessary evil.