Credit scores are statistics now considered as an indispensable part of rating, underwriting, and determining plan eligibility by insurance companies. Insurance agencies use credit scoring to determine how probable a customer or client is of repaying his or her debts. However, critics of the practice argue that the rationale behind this common practice is not sound. Many suggest that a credit score does not reflect the fiscal responsibility of the consumer as it should and that it rather is a measure of the likelihood that a customer will file a claim. This has caused the practice of credit scoring to come under much debate and scrutiny. Customers often require an explanation as to why insurers pull their credit scores. The explanation? Insurance agents often seek reasons to raise premiums. To better understand the pool of consumers that their agencies tend to attract, it is necessary for insurers to know how consumers may try to change their credit score to their benefit. Since it will inevitably be a topic of conversation between every insurance agent and their consumer, they must know this subject thoroughly to properly handle this controversial subject.
In 10 or 20 years, the insurance industry may be totally unrecognizable by today’s standards.
New technology, new competitors and new distribution channels are combining to disrupt traditional business models, reshape customer expectations, and transform the insurance buying experience.