Credit Scoring — From the Driver’s Point of View

The use of credit scores to determine insurance rates is increasingly being attacked at state levels. Last year, Washington State, insurance commissioner, Mike Kreidler unilaterally banned the use of such scores. It has other PIA Western Alliance states — like Oregon — looking at a potential ban.

The courts told him he couldn’t but Kreidler gave it another shot this year and another court battle is in progress. At the present time, Kreidler’s push is on hold.

Politicians, insurers and insurance critics are all rolling out their own statistics about how good or bad the practice is for consumers. Few stats you see are from neutral sources.

A survey of 2,000 motorists done by Forbes Advisor is neutral.

One thing the Forbes Advisor survey found is that people are starting to like the idea better than they did a year ago. This year 42% of those surveyed said they think credit ought to be factored into a rate. That’s two-times as many as 2021 when the number was 22%.

This year just 36% of respondents don’t think the credit of a driver ought to be used in rate determination. That number last year was 69%. The change toward approval is 48%.

As you know, gender, credit, education and occupation are some of the criteria used in credit scoring. Those are the four criteria used by Forbes in its survey.

In total, 62% don’t think gender should be one of the factors used in auto insurance quotes. Breaking it down, 72% of women don’t think it ought to be used while 41% of men are of that persuasion.

Here are the question Forbes Advisor asked on gender: In your opinion, should auto insurance companies take a driver’s gender into account when it comes to pricing?

Women: Yes —18%, No — 72%

Men: Yes — 53%, No — 41%

What’s funny about that statistic is that women — for the most part — pay less for auto insurance than men.

Here is the pricing question. To what extent do you agree or disagree with the following statement: Auto insurance companies should take the driver’s credit score into account when it comes to pricing?

* Strongly agree: 22%

* Somewhat agree: 20%

* Neither agree nor disagree: 22%

* Somewhat disagree: 14%

* Strongly disagree: 22%

Drivers seem to think it’s okay to take education levels into consideration when setting rates. Here’s the question. To what extent do you agree or disagree with the following statement: Auto insurance companies should take the driver’s level of education into account when it comes to pricing?

• *Strongly agree: 23%
• *Somewhat agree: 23%
• *Neither agree nor disagree: 25%
• *Somewhat disagree: 13%
• *Strongly disagree: 15%

  Here’s the question about occupation. To what extent do you agree or disagree with the following statement: Auto insurance companies should take the driver’s occupation into account when it comes to pricing?

• *Strongly agree: 28%
• *Somewhat agree: 30%
• *Neither agree nor disagree: 26%
• *Somewhat disagree: 9%
• *Strongly disagree: 7%

  The survey also asked about the fairness of rates. Here’s the question: Thinking about how much you are currently paying for auto insurance, do you believe you are paying a fair or unfair rate?

  Very fair:

  2022 —22%

  2021 — 9%      

  Fair:

  2022 — 36%    

  2021 — 39%

  Neither fair nor unfair        

  2022 —19%

  2021 —18%

  Unfair

  2022 — 14%    

  2021 — 22%

  Very unfair

  2022 — 5%

  2021 — 9%

  The survey also asked about usage-based insurance and how comfortable people would be using that kind of service.

  Very comfortable      

  2022 — 31%

  2021 — 23%

  Somewhat comfortable     

  2022 — 33%

  2021 — 28%

  Not very comfortable

  2022 — 17%    

  2021 — 18%

  Not comfortable at all        

  2022 — 13%    

  2021 — 26%

  Lastly, the survey looked at what the respondents thought of other drivers:

• *Neither good nor bad drivers: 33%
• *Good drivers: 23%
• *Not very good drivers: 21%
• *Excellent drivers: 12%
• *Terrible drivers: 7%

Source link: Forbes Advisor — https://bit.ly/3Obpebh