About Insurance Credit Scoring
Companies that Use Insurance Credit Scoring - Auto Homeowners
Companies that do not use insurance credit scoring
Insurance companies may consider your credit information to make decisions about whether to insure you and what rates to charge. A company cannot refuse to sell you a policy or cancel or non-renew your policy solely based on your credit, however. The way companies use credit information and the factors they consider vary by company.
Companies will consider your credit information for underwriting, "tiering" or rating.
Underwriting is a process in which companies decide whether or not to sell you an insurance policy. Although companies may consider your credit information to decide whether to insure you, they may not use your credit information as the sole basis for the decision. For example, companies may use insurance credit score in conjunction with other underwriting variables such as your driving record and claims history to decide whether to sell you an automobile insurance policy.
Tiering is a process in which companies use multiple rating variables to place you into a pricing tier. For example, companies may use the combination of your insurance credit score and driving record to place you into a pricing tier for automobile insurance. Once in a pricing tier, the company may apply other rating factors that reflect other individual policyholder risk characteristics (such as where you live) to determine a final premium.
Rating is the process the company uses to determine the final premium to charge an individual. It reflects the combined effects of all factors, possibly including insurance credit score, that the company feels may predict the costs it will incur as a result of insuring the individual. Depending on the approach used by the company, rating may include a "tiering" step. The companies that use insurance credit scoring for rating use insurance credit scores alone to determine a rating factor which is then combined with other rating factors to determine the final premium.
View a list of all companies that provided sample rates for Helpinsure.com and how they use insurance credit scoring - Auto Homeowners
View a list of the companies that do not use insurance credit scoring.
Companies must file their insurance credit scoring models with TDI. To request a copy of a company’s insurance credit scoring model, please submit an open records request to the Texas Department of Insurance in an e-mail to pcactuarial@tdi.state.tx.us.
Commonly Used Variables
- Current account status
- Number of accounts currently open
- Number or percentage of current accounts in good standing
- Total amount currently past due
- Degree of utilization of non-installment accounts (ratio of balance to credit limit)
- Account history
- Number accounts opened in recent years
- Age of oldest or youngest account
- Average age of accounts
- Payment history
- Number of adverse public records (such as bankruptcies, tax liens, foreclosures, and court judgments) in recent years
- Number or amount of collections in the past
- The recency and frequency of accounts past due
- Credit seeking behavior - Inquiry activity
- Number of bank and/or credit card inquiries in recent months or years
- Age of most recent bank or credit card inquiry
“Accounts” may include mortgages, auto loans, credit card accounts, retail accounts, etc.
Companies must file their insurance credit scoring models with TDI. To request a copy of a company’s insurance credit scoring model, please submit an open records request to the Texas Department of Insurance in an e-mail to pcactuarial@tdi.state.tx.us.
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