The use of insurance scoreswhich are based upon credit history data, as well as a scientific sample of insurance claims historyfor underwriting purposes remains a controversial topic among consumer groups. In order to enlighten insurance consumers about the specific information from which carriers derive such scores, Atlanta-based Equifax has formed a partnership with ChoicePoint (Alpharetta, GA) to provide consumers with their auto and homeowner insurance scores, according to Virgil Gardaya, corporate vice president and general manager, direct to consumer, Equifax.
As a result of the partnership, Equifax is reselling the scores currently marketed by ChoicePoint. When consumers access their scores on the Equifax Web site, in addition to the ChoicePoint Attract Insurance Score, they are given access to their Equifax credit report (on which the score is based). If a consumer's score is low, the product includes a resource that explains why it is low, Gardaya reports.
Insurance scores, notes David Lee, executive vice president, ChoicePoint, are derived from a series of credit characteristics. "The model predicts the propensity to file claims in the future," says Lee. "And the notion is, the individual who does a good job managing financial affairs will do a good job of managing other assets, whether they are automobiles or homes." By allowing consumers to see their scores and the reasoning behind them, as well where they fall within the norms of American consumers, there will be a demystification as to why the scores are used and how to improve them, Lee suggests.
The executives also emphasize that insurance scores differ from credit scores. Although much of the same credit history information is used in both cases, the credit score is based upon a scientific sample of credit applicant history. The insurance score is based upon a scientific sample of insurance claims history.