Check the Score: Credit Scoring and Insurance Losses: Is There a Connection?

Check the Score: Credit Scoring and Insurance Losses: Is There a Connection?
Authors/editors: Kellison, J. Bruce; Brockett, Patrick
Type: journal
Publisher: Bureau of Business Research, The University of Texas at Austin
Series: Texas Business Review
Date: 2003-02
Full text: http://hdl.handle.net/2152/15187

Description

Over the past decade, the insurance industry has begun using credit histories to create credit scores for individuals who apply for or, sometimes, renew automobile and other insurance policies. Insurers use these scores in rate-making decisions, raising premiums for individuals with poor credit history and lowering premiums for those with good credit history. Additionally, some insurers may use credit scores in underwriting procedures, including placement of policyholders within groups. So is there a connection between credit history and the potential to incur insurance loss? In examining the relationship between credit scoring and loss history, researchers must first determine whether there is a statistically significant relationship between the two and whether or not the information contained in the credit score "new" information is already used for pricing the insurance.

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