Insurance professionals who support the practice of using credit history as a factor in assessing insurance risk, got a big boost from a recently published study that claims to be the most comprehensive to date. Research based on 2.7 million auto insurance records "find [an] irrefutable connection between credit history [and] risk of insurance loss."
The significance of this study could tilt the credit scoring issue, a contentious "hot potato" between insurers and some consumer groups, in favor of the insurance industry.
The study was conducted by EPIC Actuaries, LLC, which sampled 2.7 million auto insurance records from across the country. Prior to this study, much of the statistical evidence used to support the practice of credit scoring was based on a smaller Texas study that sampled only 150,000 records.
The study was conducted on behalf of four industry groups who represent more than 2,700 insurers: the Alliance of American Insurers, the American Insurance Association, the National Association of Independent Insurers, and the National Association of Mutual Insurance Companies. Combined, members of these groups write about $327 billion in annual premiums, or 98 percent of the U.S. P&C insurance market.
Despite the number of records used to find that "irrefutable connection," I would assume that the end of the debate is not yet in sight from a consumer perspective. Without knowing or studying the research methodology, a skeptic could claim that any group with enough money can conduct a survey that proves its point of view. To be sure, the insurance industry is much better heeled than the consumer groups that oppose the practice.
Personally, I’d be interested in knowing how much more revenue the industry expects to generate in increased premium from those policyholders who, deemed a poorer risk because of credit history, are forced to pay more for insurance.
How can agents use this information? A Web site is a perfect place to post
consumer insurance issues such as this one. Include links to other sources,
e.g., the Insurance Information
Institute. Posted educational material enables the agency to be armed
with information when dealing with customer complaints when credit scoring
results in unfavorable premium increases. Then, too, including helpful background
information on a Web site enhances the agency’s role as a trusted advisor.
When insurance people hear the acronym LOMA, they think of life insurance, which for many P&C agents usually represents only a small portion of their business, if any. But more and more agents are also offering financial services, which tend to spill over into the life arena.
Inasmuch as professional designations certify special training and enhance the stature of both the individual and the agency, financial services training and expertise adds value to an agency‘s offerings.
To fill the gap in educating and certifying financial services professionals, LOMA just announced its new FFSI (Fellow, Financial Services Institute) training program and professional designation for meeting those needs. Complete program details are available online.
The ten-credit program consists of seven required courses plus three professional achievement credits, which can include previous education from other certification programs.
If your agency already includes financial services offerings or plans to add them, having an FFSI on staff could be useful. Considering market volatility and consumer desire for peace of mind when it comes to financial services, a certified professional could help distinguish your agency from others.
PS: You can almost anticipate this postscript, coming from me: When your staff member earns his/her FFSI designation, announce it, promote it, and make a big deal of it on your Web site, e-mail, and other marketing and PR vehicles.
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