Insurance Scoring

[mica.cooper]

You are right, in that it is to take the human element out.

The two biggest issues are cost and segmentation.

Human time is expensive and prone to errors. A computer will process 100,000 applications the same way every time, a human will not.

Segmentation is breaking data down into blocks of pricing based on risk. Computers excel at doing this based on data such as age, sex, claims, scoring while humans find it boring and repetitive.

Both of these combine to increase processing and pricing efficiency with the end result hopefully being and increase in underwriting profit for the company. That means decreased premiums for insureds, something we all want, I hope.

That all said, it does not remove the need for an underwriter to review applications. There should always be a process for an agent to say, hey, I've got someone here that deserves a break because... please review it.

[mhutch69]

I was involved in a retro-study on a book of business which had similar results to the Texas study on a smaller scale. Consistently, the average credit score of the policies with claims was lower than the policies without claims.

Darnovak, you can whine and cry foul all you like, it is here to stay and has credibility. Your suggestions that these results to not apply in every case is the same as stating some 24 year old single maies will not have claims. Do we lower all rates and hope for the best?

Quit whining and typing. You must have too much free time.

Who do you work for Robert Hunter?

[Island Girl Agent]

Are you kidding? In Hawaii age is not allowed to be used as a rating factor? [/quote]

No kidding...it's one of those really ridiculous laws supposedly passed to protect the consumer, but we all know what it does is drive the price up for those consumers in the "safe driving years". It's one reason we don't have a lot of auto markets in Hawaii. Hey, but other than that, it's still paradise!!!!!!!!!!!!!!!

Aloha!

[darnovak]

Dear mhutch69 (clever sock-puppet name eh?)

I am just asking questions about credit scoring. So far, I have yet to see any concrete evidence provided by a reputable source to justify using credit score to determine loss potential. I do not swallow everything I am told by "experts". Call it whining if you will. I have not lobbied my state insurance department to outlaw credit scoring - almost all of the carriers I utilize use it in various forms. At this forum I have merely asked for evidence to support its use as a P&C underwriting criteria/tool. Please try to leave the emotionalism and name calling out of posts in the future as there are plenty of infantile chat rooms where you can call people whiners or whatever names you choose. Ideally, this is not the place for personal attacks - we attempt to present and discuss ideas and theories here and solicit feedback and sources of documentation when available. Although it was non-informative, thank you for your response.

Here's some info about me: This is my 36th year in P&C. Last year I created a P&C agency for a 48,000+ member credit union and am having a ball setting up the online agency management system. When I hear people talking "crap" about P&C insurance, I usually ignore it. I maintain the use of credit scoring is (at the worst) legalized redlining until I see evidence otherwise. Haven't seen it yet.... because I doubt valid research (for at least 10 years) in this area has ever been conducted.

Regards, Dar Novak