Our changing markets.
The insurance industry has changed. Top home and car insurance companies are now using credit scoring. In particular in personal insurance the way a risk is rated is becoming more individualized, offering substantial savings to target profile clients.
For many years the rate structure of insurance was based on claims frequency/incidence in the region, or other factors such as the type of vehicle. If an insurance company suffered many losses, or paid many claims over any given year, then it was natural to see rates increase and be shared amongst all policy holders.
In today’s competitive market, insurers have taken a fresh look at how they are determining the rates, and now they incorporate a new advantage in personal insurance: Stability and credit rating.
Stability or credit rating basically allows additional credits for you based on your actual situation. Although rate increases will occur with the insurers, this added benefit for target clients will allow a definite offset on rates. In many cases we are seeing dramatic reductions.
Target clients with good credit scores will not see increases, they will see decreases and improved rates instead.
What if your credit score is not favorable?
Clients who have less than average credit scores will not see increases based on credit scoring, but they will be subject to regular rates.
Why is the insurance company using credit scoring?
Research has shown that clients with poor credit scores are more likely to have claims. Rates are therefore determined on the actual risk, named insured (the person) included.
For clients who have average to above average credit scores, this added rating tool offers greater opportunity to maximize discounts and save money, while insuring personal property such as homes and cars.
As brokers this means that we have reinforced reasons to search all markets for the most competitive rates for our clients. This is our commitment.
We are happy to know that when a client asks us, "Why do I have to pay for all the claims other people made, when I haven’t claimed anything?"
We now have a great answer and it is simple: "You don't".
Do you authorize credit scoring with your insurer? What are your thoughts?