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Insurance scoring
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Posted by Anon or Cus
(24.20.182.179) on May 17, 2004 at 03:01:12:
Allstate is now being sued for discrimination which is what ALL Insurance companies are doing to conumers. It involves using your credit file to determine how much you pay in car or home insurance. Funny how none of the insurance commercials or ads ever say you will pay more or less depending on your credit. Another site had this post which I think says it all....Good luck to those suing Allstate! Posted On: May 14, 2004, 2:05 am EDT
Posted By: David
Comment:
Credit Reporting itself in inherently racist. Credit reporting agencies (CRAs)sell consumer's personal financial information to banks, credit card issuers, insurance companie, etc. They do so by catagorizing. Most poor and lower middle class (disproportionately minorities) fall into what is known as "subprime." Meaning that they have had some sort of financial difficulties or have little in the way of financial histories. This leads to massive credit card offers by subrime lenders such as Providian (although ordered out of the subprime market by the comptroller) or Capital One, which charge upwards of 30% interest to those consumers. Needless to say, eventually many find they can't keep up with the payments and default. Now guess what? This puts them right back into a subprime pool that they can never swim out of. Enter the insurance industry. About 20 years ago the Inurance Industry lobbied hard in every state to get mandatory insurance laws...and they won. Now every consumer who needs to drive to work to support a family needs to have insurance or they could be fined/arrested.Our states have forced us to deal with them or, in most cases, not work. The people who need to do the most driving are not the wealthy or upper upper middle class. They are the Subprime group. The working stiffs who are most liable to get into financial trouble because of a job loss, turn in the economy, tragedy, etc. What the insurance industry won't tell people is that African American drivers file a disproportionate ammount of claims compared to white drivers. This is not due to driving skills but more likely to the areas which minorities must live as opposed to wealthy whites. Insurers would rather not insure many African Americans (or other minorities for that matter) but cannot refuse on the basis of race because, of course, it is against the law. So they use credit reports instead, knowing that the highest percentage of African Americans have blemished credit files. This way, as they see it, they can discriminate and stay with in the law. African Americans pose higher insurance risks because, as lower income americans, they do not own vehicles with advanced safety equipment...thus they file more personal injury claims. They live in poorer neighborhoods...thus they are more prone to theft and vandalism. And, as mentioned, they must drive more to support themselves and their families than their wealthy counterparts. There has never been a study that conclusively linked poor credit and bad driving (not even by the Insurance industry). There's no way you could based on what I've just said. The poor are the most credit challenged and do the most driving and live in the worst neighborhoods. Funny thing is, the Fair Issac company, the ones who supply the data for insurance scoring...don't even take driving records into consideration. I hope the case against Allstate opens some eyes to this blatant ripoff of consumers by the lowly insurance industry. Oh by the way, you know why the insurance companies have lost so much money in the past? Not because of claims but because they gambled on the stock market and lost. Now they'd like to pass the savings on to you
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