Predicting loss in personal lines insurance is a risky business, but carriers have found a tool to offer lower rates to customers who rarely file claims while making those who do file claims pay their fair share. Insurance scoringbased on credit recordsmay confound some consumers (and departments of insurance), but it makes perfect sense to carriers.
By Robert Regis Hyle
Personal lines insurance isnt that difficult to understand. Were in the business of assuming risk, and weve promised our customers we are going to attach the premium to the risk, says Win Logan, director of corporate communication for State Auto Insurance. It isnt always that easy, though. As Logan points out, The relatively few pay for the claims of the many. Rewarding the few, in this case, is becoming easier for insurance carriers in recent years as underwriting tools and rating engines have added another data element to their arsenal: a policyholders or applicants credit history.
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