Possibly people with good credit are more likely to renew their policies.

They may be more likely to keep their vehicles in good repair, which reduces the chance of accidents.

Philster said:nycll said:

Also the ban isn't hard to skirt around. The insurer can always pull the credit history, and instead using the FICO, it can just construct its own score based on hehavior history.

It's not quite that easy. The company has to file its rating plan, including the factors that go into it. If the state has banned credit scores, it will not take kindly to finding that the company uses an invented score, that just happens to correlate highly with credit score.

Which isn't to say that companies will just ignore credit history - if they believe it is relevant, but banned, they can search for surrogates. However, I wouldn't characterize that as "not hard".

When you are a huge insurance company and there are millions of dollars on the line, I'm sure your definition of "not hard" changes. Also, fix your quote.

pthor1231 said:

When you are a huge insurance company and there are millions of dollars on the line, I'm sure your definition of "not hard" changes.

I don't disagree.

However, OP suggested a "not hard" solution, which in fact, would not only fail, but could result in fines. The alternative is an order of magnitude harder, at least.

What exactly is "one order of magnitude harder" than "not hard"? Lol

Barefool how exactly the CA regulation read in this aspect? It is one thing to ban the use of fico score, quite different from banning the use of credit related factors, among the other factors obviously, in the model.

aeiouy said:Fairly ignorant considering insurance for automobiles is something a person MUST have if they want to drive a car in most cases.

So the consumer doesn't have a choice. They have to essentially like it or lump it, and the insurance industry collectively knows this, that is why they cook up these angles to boost their profitability. It is not an open market place. It is a closed marketplace that is fixed against the consumer, because the consumer does not have a legitimate choice to just do without.I'm afraid the ignorance is yours. The insurance marketplace is open. Even in states that require insurance, you have your choice of from dozens (in restrictive states like Massachusetts) to hundreds (in more consumer-friendly states like Tennessee) of insurance companies to choose from. Are you arguing that being required to buy insurance from one of 200 insurance companies, each company competing for your business, is fascistic?

And you probably don't know, but most states allow you to forgo purchasing auto insurance if you either purchase a bond, or put money on deposit with the state to prove financial responsibility should you cause an accident.

barefool said:From what I know, Hawaii is the only state with a statute that specifically bans credit scoring for all insurance rating or underwriting purposes. California law precludes credit scoring being used for auto insurance rating unless the regulators approve the specific plan submitted by the insurer. The regulators have stated that they will not be approving any plans.

Given that, there's really no workaround in California. Insurers could come up with a different credit-type system, but they would have to file it with the regulators, who would see it for what it is and disapprove its use.The insurers have not need to make a credit scoring system. What they need is an automobile risk system which would ideally look at credit as one of the factors. Let's say Fico is something they can't use. But in CA (and Hawaii), what happens if the insurer includes some credit factors, such as delinquency, bankruptcy history in the underwriting model, which mostly should rely on auto specific factors such as age, gender, make and model of the car, driving record, etc?

aeiouy said:Xnarg said:If someone thinks it's a great idea not to allow insurance companies to determine risk however they want, then I encourage him to start his own insurance company and not use the risk factors he sees as wasteful.Fairly ignorant considering insurance for automobiles is something a person MUST have if they want to drive a car in most cases.

So the consumer doesn't have a choice. They have to essentially like it or lump it, and the insurance industry collectively knows this, that is why they cook up these angles to boost their profitability. It is not an open market place. It is a closed marketplace that is fixed against the consumer, because the consumer does not have a legitimate choice to just do without.IMNHO, it's ignorant for arm-chair CEOs to snipe away at others who actually have to deal with the real world problems of running a business. If you have a better way, then go open you own insurance company.

nm

rzyzzy said:barefool said:rzyzzy said:The reason some states won't allow it is because it's not true. It's simply another thing the insurance companies do to increase their profits at your expense.You should refrain from making definitive statements without evidence. Insurance companies have proven, through statistical studies, that risk is correlated with credit score. That's why regulators let them use credit in the rating algorithm.

And rates aren't increased by using credit scores. Rates are simply adjusted corresponding with risk. People with high credit scores actually pay lower premiums due to their lower risk. It's a good thing.

I would advise you not to make statements without evidence as well. I had a personal experience with this, and my rates went up - the reason given by my agent at the time was that my credit score had dropped.

The only thing the insurance companies have proven is that they are greedy, opportunistic, and anti-competitive, unless the government holds them back.

EVIDENCE

It's six pages, so I've pasted a relevant section below. Bottom line - you've been fed some kool-aid. Since you believe your score is fine, this issue doesn't matter. When it affects you, then it will become a problem.

See the facts below....

The Attorney General’s office finds it problematic for three reasons:
1. There is little or no transparency in the insurance industry. Consumers have no way of knowing which specific factors are being used to determine their insurance premiums. In the case of a “credit score,” these numbers may be based on a credit report, but are not identical to those reports. Simply reviewing a credit report will not offer a consumer a clear picture of what factors an insurance company has used to set that score.
2. There is little rational and independently verified correlation between a poor credit rating and a poor driving record.
3. Credit reports are notoriously error-ridden. Using an inaccurate report to determine an insurance premium is unwise and unfair.

If you don't agree with this, that is your perogative - however for every correct and accurate credit report, there is a gamer willing to do "bumpage" or the usual creditboard tricks to falsely increase their scores. And more than a few people, including myself have been dinged for things we didn't do, and we've had NO LUCK in removing inaccurate derogatory information from our reports.

All you are doing is showing that it's not a perfect model. Of course it isn't, nothing is. Along with the careless people it's going to catch those with flawed credit reports & AORers and the like. The fact remains that it gives a better model than not using it.

Slydawg1 said:I have a high credit score so one would think that my rates would be cheap. My insurance is not cheaper than a normal person with a low credit score. I think the companies use whatever criteria they want in their favor.

Example: They will penalize a person with a low credit score and then not reward a person like myself with a 780 fico. They are shady!That would be true if there were no competition.