Insurance Information Institute has received a lot of calls about automobile rating factors. Here’s some background information.
I testified before Congress on May 1, and rating factors were one of the topics I was asked about. This testimony is available.
The National Conference of Insurance Legislators created a model law regarding the use of insurance scores
For over two decades, insurance scores have been carefully examined and it is clear that they are accurate in predicting a loss. Here is a list of scholarships from the NAIC.
Insurers are prohibited from using the scores as a proxy for income. This is a recent study questioning this assumption.
The study “finds that insurance scores do not operate as a proxy for income within a basic actuarial model of vehicle claim risk,” as it reads, “Do Credit-Based Insurance Scores Proxy For Income in Predicting Automobile Claim Risk.”
From 2007 through 2014, Daniel Schwarcz served as a consumer advocate with the National Association of Insurance Commissioners.
Why insurance credit ratings may be used to forecast a person’s chance of being in an accident is a question we get asked frequently.
Empirical Evidence On the Use of Credit Scoring to Predict Insurance Losses with Psychosocial and Biochemical Explanations is the title of this investigation.
The psycho-social perspective explains credit scoring through a discussion of sensation seeking and the function of self-control theory.
An overview of the chemical and biological correlates of risk-taking is given in this article.
It clarifies how knowledge of risk-taking conduct in one area can be used to anticipate risk-taking behavior in other areas (such as risky financial behavior or poor credit history) (e.g.
