Credit-based insurance scores : impacts on consumers of automobile insurance / Martin H. Tarlingtoná, editor.

Format:

Book

Author/Creator:

United States. Federal Trade Commission.

Contributor:

Tarlington, Martin H.

Language:

English

Subjects (All):

United States. Federal Trade Commission.

United States.

Consumer credit--United States.

Consumer credit.

Credit scoring systems--United States.

Credit scoring systems.

Discrimination in insurance--United States.

Discrimination in insurance.

Automobile insurance--United States.

Automobile insurance.

Physical Description:

1 online resource (165 p.)

Edition:

1st ed.

Place of Publication:

Hauppauge, N.Y. : Nova Science Publishers, c2009.

[Washington, D.C.] : Federal Trade Commission, [2007]

Language Note:

English

System Details:

Mode of access: Internet from the FTC web site. Address as of 6/18/08: http://www.ftc.gov/os/2007/07/P044804FACTA%5FReport%5FCredit-Based%5FInsurance%5FScores.pdf; current access available via PURL.

Summary:

This title addresses credit-based insurance scores primarily in the context of automobile insurance. Credit-based insurance scores, like credit scores, are numerical summaries of consumers' credit histories.

Contents:

Intro

CREDIT-BASED INSURANCE SCORES: IMPACTS ON CONSUMERS OF AUTOMOBILE INSURANCE

CONTENTS

PREFACE*

Chapter 1 I. EXECUTIVE SUMMARY

Chapter 2 II. INTRODUCTION

Chapter 3 III. DEVELOPMENT AND USE OF CREDIT-BASED INSURANCE SCORES

A. BACKGROUND AND HISTORICAL EXPERIENCE

B. DEVELOPMENT OF CREDIT-BASED INSURANCE SCORES

C. USE OF CREDIT-BASED INSURANCE SCORES

D. STATE RESTRICTIONS ON SCORES

Chapter 4 IV. THE RELATIONSHIP BETWEEN CREDIT HISTORY AND RISK

A. CORRELATION BETWEEN CREDIT HISTORY AND RISK

1. Prior Research

2. Commission Research

a. FTC Database

b. Other Data Sources

B. POTENTIAL CAUSAL LINK BETWEEN SCORES AND RISK

Chapter 5 V. EFFECT OF CREDIT-BASED INSURANCE SCORES ON PRICE AND AVAILABILITY

A. CREDIT-BASED INSURANCE SCORES AND CROSS-SUBSIDIZATION

1. Possible Impact on Car Ownership

2. Possible Impact on Uninsured Driving

3. Adverse Selection

B. OTHER POSSIBLE EFFECTS OF CREDIT-BASED INSURANCE SCORES

C. EFFECTS ON RESIDUAL MARKETS FOR AUTOMOBILE INSURANCE

Chapter 6 VI. EFFECTS OF SCORES ON PROTECTED CLASSES OF CONSUMERS

A. Credit-Based Insurance Scores and Racial, Ethnic, and Income Groups

1. Difference in Scores Across Groups

2. Possible Reasons for Differences in Scores Across Groups

3. Impact of Differences in Scores on Premiums Paid

a. Effect on those for whom Scores Were Available

b. Effect on Those for Whom Scores Were Not Available

B. SCORES AS A PROXY FOR RACE AND ETHNICITY

1. Do Scores Act Solely as a Proxy for Race, Ethnicity, or Income?

2. Differences in Average Risk by Race, Ethnicity, and Income

3. Controlling for Race, Ethnicity, and Income to Test for a Proxy Effect

a. Existence of a Proxy Effect.

b. Magnitude of a Proxy Effect

Chapter 7 VII. ALTERNATIVE SCORING MODELS

A. THE FTC BASELINE MODEL

B. ALTERNATIVE SCORING MODELS

1. "Race Neutral" Scoring Models

2. Model Discounting Variables with Large Differences by Race and Ethnicity

Chapter 8 VIII. CONCLUSION

APPENDIX A. TEXT OF SECTION 215 OF THE FACT ACT

SEC. 215. STUDY OF EFFECTS OF CREDIT SCORES AND CREDIT- BASED INSURANCE SCORES ON AVAILABILITY AND AFFORDABILITY OF FINANCIAL PRODUCTS

APPENDIX B. REQUESTS FOR PUBLIC COMMENT

FEDERAL TRADE COMMISSION

SUMMARY

DATES

ADDRESSES

FOR FURTHER INFORMATION CONTACT

SUPPLEMENTARY INFORMATION

I. Background

II. Request for Comments

A. Credit Scores and Credit

B. Credit-Based Insurance Scores and Property and Casualty Insurance

APPENDIX C. THE AUTOMOBILE POLICY DATABASE

C.1. THE EPIC DATABASE

C.2. THE FTC DATABASE

C.2. 1. Additional Information Obtained for the Full Sample

Core Policy Data and ChoicePoint Credit Scores

Geographic Location Information and Census Data

Choice Point Credit History Variables

CLUE Data

Hispanic Surname Match

Vehicle Characteristics

C.2.2. Additional Information Obtained for a Sub-Sample of 400,000

FICO Scores

SSA Data on Race, Ethnicity, National Origin, and Gender

APPENDIX D. MODELING AND ANALYSIS DETAILS

D. 1. INTERMEDIATE ANALYSIS AND DATA PREPARATION

D. 1.1. Using Race and Ethnicity Data

D. 1.2. Nationally Representative Weighting

D. 1.3. The Modeling Sample

D.2. THE RISK MODELS

D.2. 1. Generalized Linear Models[166]

D.2.1.1.Modeling "Frequency"

D.2.1.2. Modeling "Severity".

D.2.1.3. Modeling Total Claims Cost ("Pure Premiums")

D.2.2. Bootstrapping Significance Tests

D.2.3. Variables Used in the Risk Models

Credit-Based Insurance Score Decile

Race/Ethnicity

Tract-Level Income

Age / Gender / Marital Status

Territorial Risk

CLUE Data - Prior Uninsured Motorist / Underinsured Motorist Claims

CLUE Data - Prior Bodily Injury / Property Damage Claims

CLUE Data - Prior Collision / Medical Payments / Personal Injury Claims

CLUE Data - Prior Comprehensive-Only Claims

CLUE Data - Prior Towing and Labor-Only Claims

CLUE Data - Prior Rental Reimbursement Claims

Number of Accidents

Number of Violations

Tenure

Property Damage Liability Limits

Bodily Injury Liability Limits

State Minimums

Collision Deductible

Comprehensive Deductible

Annual Mileage

Principal / Occasional Driver

Use

Homeowner

Multi-line Discount

Multi-Car

State

Model Year

Body Type

Restraint System

Displacement

APPENDIX E. THE SCORE BUILDING PROCEDURES

E. 1. DEVELOPING THE FTC BASE MODEL

E.2. DEVELOPING "RACE NEUTRAL" MODELS

E.3. DISCOUNTING VARIABLES FOR DIFFERENCES ACROSS RACIAL AND ETHNIC GROUPS

APPENDIX F. ROBUSTNESS CHECKS AND LIMITATIONS OF THE ANALYSIS

F.1. LIMITATIONS OF THE DATA AND THE ANALYSIS

No Information on People who did not Obtain Insurance

Single National Model

Pooled Company Data

Sub-Sample of Industry

Territorial Risk Variable

F.2. ROBUSTNESS CHECKS

FICO Score

No Nationally Representative Weights

Outliers

Full-Sample Models

Census-Only Race and Ethnicity Data

Absolute Income Measure

Race and Ethnicity Imputation Cut-Offs

High-Risk Sub-Group

Estimating Total Losses by Modeling Frequency and Severity Separately

Single Combined-Coverage Model

"Tiering".

Number of Score Categories

Number of Geographic Risk Categories

REFERENCES

LIST OF CONTRIBUTORS

Bureau of Economics

Bureau of Consumer Protection

Analysis Team

Other Contributors

INDEX

Blank Page.

Notes:

Description based upon print version of record.

Includes bibliographical references and index.

Description based on online resource; title from PDF title page (Site, viewed 01/29/2021).

ISBN:

1-61728-213-8

OCLC:

923661830