Pay As You Go rating

[darnovak]

So CA has approved PAYG rating? Are they insane? We all know that credit profiling is the ONLY guaranteed way to determine loss potential. It is so accurate a predictor I am waiting for courts to allow judges and juries to use crdeit profiling to automatically determine guilt. Think of the billions of dollars (not to mention the human-hours) we could save by using this fantastic predictor to tell us who our criminals are. How dare any scientist/true researcher collect real data about how someone drives and expect that driving data to be more accurate than credit profiling? What nerve! When will the latest 'studies' be released proving low credit score shows the criminal in us? I can hardly wait until the people doing the study chart the credit profiles of convicted murderers, rapists, etc. and release their conclusive results. What will be next? it might be your credit profile predicts your premature death.... the life insurance companies will have a field day rejecting folks. Hey, maybe they already are?????? I shoulda bought a ton of stock in 'Credit Score Inc' about a decade ago - rats! regards, Dar Novak

[gregcw]

So CA has approved PAYG rating? Are they insane? We all know that credit profiling is the ONLY guaranteed way to determine loss potential. It is so accurate a predictor I am waiting for courts to allow judges and juries to use crdeit profiling to automatically determine guilt. ..........., Dar Novak

I beg to differ with you. While it has been established that credit profile is a factor in loss prediction I do not know of a single company that has Totally eliminated the traditional factors of Age, Gender, Driving Record, Marital Status etc. as rating or underwriting factors. Admittedly some will waive the ordering of Motor Vehicle Records with an excellent credit score but they DO STILL consider age, gender and marital status in their rating factors. I'm not entirely in favor of the PAYG program although aspects of it does have merits. Many companies already provide discounts for low mileage and most companies rate based on; pleasure use only; distance driven to work more than 3 miles and less than 15; distance driven to work more than 15 miles; and vehicles being used either in business or as an artisan contractor. It's all a matter of actuarial accounting.

[KPIA]

Ummmm... I think darnovak was being facetious.

[alx730]

They're just baiting you. Don't waste your time.

[KPIA]

I would like to add for the PAYG issue, if they think the people are gaming the system now, wait until 'honor system' mileage reporting bites them where they sit. The only way to make it work is through electronic mileage verification or agent verification, with the latter being too cumbersome and work intensive for all parties involved (client, agent and company). That leaves electronic which I don't think the consumer will get on board with. We'll see though, wouldn't be the first time I was wrong.

[mica.cooper]

I think the whole argument is silly and has no standing. Credit is a proven valid factor in future loss calculations and has nothing to do with PAYG as an form of policy as far as I know.

[gagal]

Some people don't get satire.

[darnovak]

I beg to differ. I have seen no concrete evidence (true research) that credit has any involvement whatsoever in predicting losses for any type of insurance. The exclusion might be 'arson for profit'. Consider this: Forget credit profile for a second (if you can). Have you or anyone you know filed an insurance claim and come out 'ahead' when the dust has settled? I doubt it - except for a successful 'arson for profit'. So where is the incentive for being reckless and having losses? Do folks act carelessly allowing losses to occur just because they enjoy the insurance claims process? Again, I doubt it. Credit schmedit. Some statistician in Texas took a photo of 10,000 claims and noted that a majority of the people have low credit scores and 'presto' a new criteria for predicting who will have a loss. The subjects were not observed and data collected for a 10 or 15 year period and then the data examined to yield the findings. I say the credit/loss relationship is a junk science 'study' and did not arise from true research. If it were real research done over a period of years and the findings true and reliable, it would have been all over the media and in plain sight for everyone to examine for themselves. I still maintain 'The king has no clothes' even though many in our industry chant 'it works because it works'. Show me the evidence and I'll reconsider my position. After 39 years in P&C I maintain credit profiling is 'bunk' but I use it because all of our carriers use it - and some carriers rely way too heavily on it. That doesn't mean I have to agree it is valid. I am not mandating people who side with it be shot, mugged, or strangled either, but I ask to see evidence and to date I haven't gotten anything but lip service - "It works because we say so...". Regards,

[alx730]

I'm sure that these insurance companies actuaries have all of the evidence that you need and then some. Plus, this is a free country where they can run thier exposure levels on whatever risk they choose, whether it be credit, homeownership, or how many teddy bears they have. It should make no difference to those who are agents, and in the long run, the Market will pick its winners and losers based upon those who chose to rate their risk correctly and better than the competition. This is not a "social engineering" issue... or at least shouldn't be.

[mica.cooper]

I second that,
There is a lot of data that has been thoroughly reviewed/vetted by extremely smart people to support this. The market rules and the market proves that credit use is a valid factor in rating. If it were not, you would see companies touting not using it and being more profitable than others using it.

I personally can attest as one company I work with has kept their rates low and only taken a slight increase in the last three years. The reason they have been able to do so is good underwriting and credit. Less claims equals lower rates.

[darnovak]

"There is a lot of data that has been thoroughly reviewed/vetted by extremely smart people to support this."
OK...mica.cooper where is this data? Who possesses it? Name one name and how to contact please. I am waiting.
"I'm sure that these insurance companies actuaries have all of the evidence that you need and then some"
OK...alx730 name one company, one person and how to contact.
These replies are the same old chant of how beautiful the king's clothes are. All I ask is that you 'Show me the clothes!' instead of telling me how beautiful they are. Understand?
I rest my case and I won't bother you sheep with this any more. If anyone presents me with 'evidence' I will be back and let all of you know.

[mica.cooper]

http://www.tdi.state.tx.us/reports/credit3.html

This is the landmark report that studied 2,000,000 persons. This is valid and NO AMOUNT of your BS will make it otherwise, and yes, we did land on the moon, and the earth is round.

[alx730]

Darnovak,

You want one company? How about ALL of them. Try to cut through the fog of your political beliefs and usher yourself into the real world. You act as if these companies want excuses to raise their rates as opposed to using proven data. Go back to your liberal talk radio, and don't worry youself with such trivial things such as why companies would want to make money and be profitable. And if you want "one person and how to contact them," my information is below. I don't hide behind avatars trying to insitgate things in chat rooms. I'll do my best to walk you through how these things work, but please understand that I am extremely busy trying to make a living for my family so please keep your questions to a minimum.

[alx730]

800-920-4125 x217

[darnovak]

I have no idea what 'talk radio' has to do with my inquiries. By the way - I do not listen to talk radio (what an absurd assumption...). Nor have I ever (in these forums) alluded to any of my political beliefs. So far, no names and no contact information. The TX 'survey' was a photograph of x number of claims and not true research. Keep up the character assasination, name calling, and personal insults to support your positions. I will continue my search for real evidence and report back when and if I find it. Regards to all, Dar Novak