Insurers are dancing in the streets, hailing a long-awaited (and feared) report from the Federal Trade Commission concluding not only that credit scores are an effective predictor of risk for auto policies, but that the use of credit-based insurance scores may result in benefits for consumers. The question is, will the party last? Or will carriers soon be left with a bad hangover?
(For full coverage of the report and the industry's reaction, click here.)
Much to the delight of carriers, the report said credit scores “permit insurance companies to evaluate risk with greater accuracy, which may make them more willing to offer insurance to higher-risk consumers for whom they would otherwise not be able to determine an appropriate premium.
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