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Controversy swirls over whether insurers should use credit scoring in pricing policies by reactions magazine, december 2003 the california health insurance practice of using a person's credit history to determine their insurance premium is causing controversy in the us, consumer california medical insurance groups say it amounts to discrimination; insurers say it is a reliable method of determining how likely someone is california auto insurance.

To file a claim, russ banham reports, consumer groups blast it as anti-consumer, insurance companies insist it is pro-consumer, california department of insurance the "it" in question is credit scoring: the use of a person's credit history by insurers to.

Underwrite personal california health insurance quote lines motor and homeowners insurance, the contentious practice is this decade's redlining controversy, pitting critical consumer advocates against vehement california health insurance plan insurance executives in a no-holds-barred battle, and the battle is raging fiercely, robert.

Hunter, a former federal insurance administrator california individual health insurance and texas insurance regulator, and now the director of insurance at the consumer federation of america, says credit scoring health insurance in california is a sophisticated way for the personal lines insurance industry to avoid selling insurance to low-income ethnic minorities, "the group health insurance california industry has redlined for decades," hunter says, "why stop now, especially if you.

Can find a way to do california state health insurance it that doesn't look like you're doing it?" redlining refers to some insurers' practices in the 1970s of basing california car insurance insurance rates on postal codes, it is alleged that some companies charged people from ethnic minorities who lived in california.

Unemployment insurance certain postal districts more for insurance than people who lived in other areas, or they simply did not offer california contractor general liability insurance insurance in these places.

At all, the name comes from the fact that insurers would effectively draw a red california dept of insurance line around a particular area and either refuse to write there or charge residents higher prices than elsewhere, it california home owner insurance is now illegal for.

Insurers to redline, but hunter claims that credit scoring is a way of getting around california state disability insurance the law, "the industry redlines because it believes that hispanics and blacks cause more claims," he says, "it's no dental insurance california different than.

The days of segregated bathrooms, this is just segregated insurance," the insurance industry denies this, it points car insurance san jose california out that credit scoring does not take into account a person's race or income, insurers contend that a person's insurance attorney california bill-paying history is a reliable indicator of his or her propensity to file a claim and they cite.

Several california insurance commissioner studies supporting this correlation, moreover, they assert that credit scoring ensures fair underwriting treatment of all insurance policy applicants, california life insurance "without credit-based insurance scores, good drivers will subsidise bad drivers when it comes to buying car.

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Insurance," says robert california motorcycle insurance hartwig, chief economist at the insurance information institute in new york, "the truth is that credit scores are highly california restaurant insurance accurate predictors of future All 50 States Insurance loss in auto and homeowners insurance, without it, millions of individuals who are good risks california earth quake insurance will pay more for insurance than they should," the tempest many consumers and agents have complained of policies being california casualty insurance cancelled.

Or not being renewed by insurers for credit reasons alone, they say insurers have also been unwilling to california disability insurance explain their decision and, in some cases, the decision has been based on inaccurate or inferior credit information, the broker california insurance online legislation is said to address these concerns in a number of ways, it will require insurers to provide.

An state of california department of insurance explanation when cover is cancelled or not renewed because of the applicant's credit score, insurers will have to submit california renters insurance their credit scoring methods to state insurance regulators for approval, and insurers will have to re- underwrite and alter california home insurance the.

Rate charged on policies where the holder's credit report has been updated or amended by credit bureaus, the california term life insurance bill will also prohibit insurers from using credit information as the sole basis for underwriting, a practice said to california state compensation insurance fund have been adopted by a few carriers, "this legislation responds to the complaints.

Made by independent agents and consumers," california boat insurance says dave snyder, vice- president and assistant general counsel at the american insurance association, "there are no.

Black boxes cheap car insurance california any more with respect to how these scores were devised, insurance regulators now have complete access to the same california insurance commission information that insurers use to develop a score," the legislation has been passed in its entirety by a dozen.

California worker compensation insurance states, another dozen have passed a version of the bill, tweaking different aspects to suit their local markets, the kaiser permanente insurance california rest of the states are still considering the legislation, "the bill, or at least a reasonable facsimile, is becoming california term insurance the standard in many states, governing the use.

Of credit information for insurance purposes," says hartwig, "those states that california auto insurance quote don't allow it, such as maryland, are suffering the consequences," maryland is the only state to have banned the california insurance code use of credit scoring, hartwig says maryland homeowners with the best credit scores pay between 20% and 40% more california long term care insurance for their homeowners insurance.

Than similar people in other states, "is that fair?" he asks, "maybe to the poorer california insurance license risks who are getting a good deal on their insurance because the better risks in the state are subsidising california.

Medical insurance quote them by paying more for their homeowners insurance," hunter says he has heard these arguments before and questions the california family health insurance motivation behind the bill proposed by ncoil, "the truth is that ncoil is an organisation made up mostly of cheap auto insurance california insurance.

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Executives," he says, "what else are they going to promote but a pro-insurer bill? this bill does nothing, california All 50 States Insurance low cost health insurance it just obscures the truth, and the truth is that credit scoring is wrong, it's discriminatory and must be state of california insurance banned in all states, period," logical connections hartwig.

Sides with the insurers, however, and argues there is a link, car insurance ventura california he also tries to explain it, "no logical connection?" he says, "come on, it should not be surprising that california state insurance commission people who are responsible and prudent in one area of their lives, areas that we can objectively and quantifiably california individual health insurance quote measure via their use of credit, demonstrate.

Responsibility and prudence in other areas of their lives, "there are very california insurance quote few individuals who are absolutely meticulous with respect to many important areas of their lives and are reckless maniacs dental insurance in california.

Behind the wheel, credit scores are a measurement of a person's responsibility traits and this has value for obtaining california self employed health insurance a loan or for insurance, the bottom.

Line is that the relationship between credit standing and relatively low [loss] california term life insurance quote ratios is statistically irrefutable," a study by the university of texas's.

Bureau of business research, released in march, affirms california department of insurance licensing a statistical connection between a person's credit habits and the likelihood they will file an insurance claim, the study auto insurance san jose california shows that those with the poorest credit scores generated almost twice the losses on motor insurance policies than those contractor insurance california.

With the best scores, another insurance industry-sponsored study, released in june by epic actuaries, analysed 2,7m auto insurance policies, auto insurance in california it also concluded that credit and insurance losses All 50 States Insurance are "unquestionably correlated", the study called credit-based insurance scores.

"one of california life insurance quote the most valuable tools" insurers have for the accurate rating and pricing of auto insurance, "the study found an california insurance commisioner extremely high correlation between credit and claims frequency," says snyder at the aia, "for example, people with the worst california family health insurance quote insurance-based credit scores were 30% more likely to have.

Had filed a claim, those with the best scores were california car insurance quote about 20% less likely to have a claim filed, in some states, such as new york, the correlation is california insurance company dramatically higher, in new york, a person with the worst credit score is 60%.

More likely to file a california auto insurance company claim," and others in the industry agree that the correlation is indisputable, "credit is definitely a good predictor of car insurance stockton.

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California risk," says nicole allen, director of government affairs at fireman's fund insurance company in novato, california, "these studies show cheap california health insurance the correlation from a statistical perspective, the.

Correlation is there and cannot be denied," but hunter says a statistical california blue cross health insurance correlation is not enough, "twenty years ago, the california department of motor vehicles did a study.

That discovered a blue cross insurance of california connection between a person's driving record and hair colour," he says, "does that mean that hair colour should be california insurance group a determinant of insurability or an insurance rate? of course not, you need to start with a thesis such california individual medical insurance quote as: 'young men with testosterone tend to drive faster than the rest of.

Us, so do they cause more california truck insurance accidents?' then you look at the data, you don't start with data and say: 'hey look, i found something,' california health insurance company you need some intuitive logic first," "no you don't," counters hartwig, "actuarial science requires correlation not causation, that's the automobile insurance california law, and hunter, who is an actuary, should know that, a.

16 year-old male is charged more for auto california auto insurance law insurance than a 40 year-old female because correlation analyses show he is far more likely to be involved in car insurance modesto california an accident, you don't need a thesis analysing the differences between 16 year-old men and 40 year-old women before california health insurance quot you dig into the data," tossing brickbats but allen at fireman's fund denies.

This, "credit-based insurance scores are colour-blind," california auto insurance online she says, "credit reports contain no information on race, ethnicity, religion or marital status, and the ncoil model bill car insurance in california expressly prohibits insurers from using any insurance score that is calculated using income, gender.

Addresses or zip All 50 States Insurance codes, ethnicity, car insurance bakersfield california religion, marital status or nationality, credit is simply credit, and it is a reliable indicator of a person's potential home insurance san jose california for causing insured loss," other insurance executives back allen up, "our objective is to.

Price insurance policies as accurately california business insurance as possible, which helps us make an underwriting profit and grow," says thomas hollyer, agency product development manager at nationwide health insurance california progressive insurance companies in cleveland, ohio, "we do not use credit to cancel, non-renew or decline offering insurance to.

Worker comp insurance california anybody, when we look at credit, we're looking at bill- paying behavior, we don't have any information, and i california cheap health insurance quote mean any, on a person's race, income or disability," snyder.

At aia describes hunter's allegations as inflammatory, he says car insurance santa rosa california they stem from the politics of consumer groups that campaigned against some previous underwriting systems that relied heavily on california insurance.

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Law broad classifications such as territory and age, but he says he cannot understand how basing premiums on credit scores california care insurance long rate term is deemed anti-consumer, "the industry was criticised then because we weren't being individualised enough in our underwriting, now we california state auto insurance apply something extremely individual like credit on top.

Of other criteria, which we believe will have a beneficial impact insurance school california on people who would otherwise pay more for insurance, something that the groups should applaud, and they criticise it, california care insurance long quote.

Term we now have companies offering 12 different pricing tiers, in part because of information that is available on credit, california car insurance rate one has to argue this is in the obvious interest of consumers," and hartwig agrees, "if hunter gets what california insurance guarantee association he wants, the banning of credit information for insurance purposes, good drivers and responsible homeowners will be forced to california state fund insurance subsidise those.

With poor loss histories by hundreds of millions of dollars each year, now that's a statistical correlation, california auto insurance rate meanwhile, the incentive to drive safely will decrease, as will the incentives to properly maintain one's cars and homes," california health and dental.

Insurance hunter, however, who has worked for consumer movements for four decades, isn't budging, "there are only three reliable and california car insurance company fair indicators of a person's insurability in an automobile insurance.

Context: driving record, the number of years of driving california health insurance online quote experience and the number of miles driven," he says, "the rest are meaningless,".