Letter: Credit-based insurance scores are objective

Thursday, March 13, 2003 | 8:48 a.m.

The Sun's March 7 editorial, "Bad credit not a risk for drivers," contained many common misconceptions about the use of credit-based insurance scores in underwriting auto insurance. We would like the opportunity to set the record straight.

An insurance score is just one of the factors companies look at to form a clear picture of the risk and to price their products more accurately and fairly. Research shows that people who manage their personal finances responsibly also manage other important aspects of their life responsibly.

Combined with familiar factors such as years of driving experience, previous crashes, and the age of your vehicle or home, insurance scores are another way for insurers to differentiate between lower and higher insurance risks.

Credit-based insurance scores are "blind" and objective. Insurance scores never factor in information about your income, race, or where you live. They are a snapshot of how well you manage your assets, not how much wealth you have accumulated.

The use of credit-based insurance scores should not be a secret. Every existing and potential policyholder deserves to know if and how a company uses credit information. If you don't feel your agent is telling you what you need to know, shop around for another who will.

We are looking forward to working with the state Legislature to craft a bill that protects consumers from unfair use of insurance scores while continuing to allow companies to offer the majority of their policyholders the discounts these scores provide.

JOSEPH ANNOTTI

Editor's note: The writer is vice president of public affairs for the National Association of Independent Insurers, a trade association based in Des Plaines, Ill.