Contact:
Karl Newman, President
Darrin Sanger, Communications Director
NW Insurance Council
Phone: (206) 624-3330
Fax: (206) 624-1975
karl.newman@nwinsurance.org
darrin.sanger@nwinsurance.org
Credit-based
insurance scores prove both fair and accurate
SEATTLE –
What does a person’s credit history have to do with auto
insurance? A whole lot more than most people think. Credit-based
insurance scores are used by more than 90 percent of auto
insurance companies in the United States. Why? Because
they’ve proven to be a very accurate way to predict the
likelihood of a person experiencing a loss and filing an
insurance claim.
“Insurance scores give insurance companies another tool
to ensure that customers get a fair rate, based on each
policyholder’s unique circumstances,” said Karl Newman,
president of the NW Insurance Council. “In fact, insurance
scores can allow companies to give policyholders lower preferred
rates when other factors such as type of vehicle or driving
record would normally require higher rates.”
Here are some key facts
about insurance scoring:
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An insurance score is a numerical rating based on factors
such as timely payment of bills, public notices, bankruptcies,
tax liens and credit inquiries. Some insurance scoring
models also include prior claim history.
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Insurance scores are only one of many rating factors
used to determine eligibility and rates. Some of the
others are age, driving record, vehicle, and mileage
driven.
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Insurance scores have proven to be a very accurate
way to predict future claims. Separate studies conducted
for insurance regulators and insurance companies have
shown a very strong statistical correlation between
low credit scores and frequent claims.
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Insurance scores do not discriminate against lower
income groups. A low insurance score has nothing to
do with income and everything to do with how people
manage their money. In fact, some of the best insurance
scores appear among low and moderate-income groups.
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An insurance score will not be affected by inquiries
from most insurance companies.
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An insurance score does not consider personal characteristics
such as age, gender, income, net worth, home address
or ethnicity.
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Insurance scores do not include specific information
about outstanding loans.
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The Federal Fair Credit Reporting Act of 1970 and
Washington State’s 1993 Fair Credit Reporting Act allow
insurance companies to use credit information when evaluating
insurance coverage.
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Using credit wisely is the best financial strategy
for maintaining a healthy credit profile.
For a free brochure that includes information about how consumers can manage
or improve their credit profiles, contact NW Insurance Council
at (800) 664-4942 or visit www.nwinsurance.org.
NW Insurance Council is a nonprofit, public-education organization funded
by member insurance companies.
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