Campaign against high insurance premiums for people with poor credit

[neil6534]

Hi all, I am seeking help from everyone.

 

Recently I had to get lots of quotes for car insurance and they were all pretty high.

I found out that the reason for this is due to my credit file and what credit risk I am deemed to be.

 

The insurance companies/brokers look at your credit file and then decide if you are a good or bad threat. If you are a bad threat then your premium will be higher than those with a good credit file.

 

This I feel is discrimination and an unfair pricing policy.

 

The insurance companies/brokers will look at your file to decide what premium is to be applied but do not reflect that you have made monthly payments without fail back on to your credit file. So in one hand they use your bad profile to exploit you and on the other they do not reflect your ability to pay back the monthly installments.

 

Even if you decide to pay in full on a one off payment you are still hit with a higher premium, the only difference being that you don't have to pay interest for paying monthly.

 

Any suggestions on who I can contact in the media to highlight this problem?

 

Please keep your suggestions relating to this problem.

[chrissy88]

I know that its not fair at all, but that is how insurance companies work and make their huge profits

[tm166]

My concern is that many people may be paying higher insurance premium due to incorrect information on their credit file, which they may be unaware of.

 

I think if someone is charged a higher premium as a result of information on their credit file they should be informed of this, otherwise it is unfair for someone to check their file every other day.

[renegadeimp]

What i dont understand is why is it so high for people who pay in a lump sum? I understand credit checks for those drivers that want to pay monthly, but not for those who just want to pay it in one go. In that scenario, there is no reason at all to check a credit file.

[tm166]

Well from what I have read is that if one has a low credit score, you are more likely to make a claim.

[tm166]

The following is from Association of British Insurers.

 

Bankruptcy, and credit scoring more generally, can be an indicator of risk and evidence shows that it is predictive of claims experience. Information collected by reference agencies to determine a credit score will typically include details of county court judgements (CCJs) and bankruptcy. As such, some – but not all – insurers use credit scores as one of several rating factors to determine risk, and a poorer credit history is likely to lead to a higher premium.

 

I don't agree with this, but someone probably needs to take them to court to get any change.

 

So If you had some difficulty with your finance, how does that make you a higher risk driver.

[Old Cogger]

Most People with credit problems situation is brought abought by High Interest Payments, time to bring back people justice and private sittings with the perpatrators, and get rid of Regulators (Non Regulators) as they seem unable to do any sort of job, and just publish guidelines which are not enfirceable only recommended.

 

Like the non government who rather companies etc self regulate as the government know that to issue actual legislation would be ignored until something goes wrong!

[Old Cogger]

The following is from Association of British Insurers.

 

Bankruptcy, and credit scoring more generally, can be an indicator of risk and evidence shows that it is predictive of claims experience. Information collected by reference agencies to determine a credit score will typically include details of county court judgements (CCJs) and bankruptcy. As such, some – but not all – insurers use credit scores as one of several rating factors to determine risk, and a poorer credit history is likely to lead to a higher premium.

 

I don't agree with this, but someone probably needs to take them to court to get any change.

 

So If you had some difficulty with your finance, how does that make you a higher risk driver.

 

Because the sad buggers think you stand a good chance of fraudulant claim,well if that is the case then they are pre-judging people which is a criminal offence, to my mind if that is the case.

[Rymitch]

So what is next the police pulling you over and fining you for driving while having a bad credit score:lol:

[BRIGADIER2JCS]

Pay insurance by instalments is a form of credit and CRA checks have ways been done.

[Peterbard]

Interesting. I suppose when it comes to household insurance it makes a kind of sense.People with money problems are more likely to have an "accident" with a pot of paint when they need a new carpet, I suppose.

 

The connection with car insurance is a more tenuous one, I can't really see the justification for it affecting third party only policies for instance.

[BRIGADIER2JCS]

The credit records are checked on motor insurance especially if the insurance is to be paid for by instalments, it is well known that unscrupulous people will take insurance paid this way pay one or two instalments and cancel payment once they have the insurance certificate in their hands, if this happens insurers default the account within 7 days which will show on CRAs so it is needed to prevent a recurrence of this criminal act.

[Peterbard]

The credit records are checked on motor insurance especially if the insurance is to be paid for by instalments, it is well known that unscrupulous people will take insurance paid this way pay one or two instalments and cancel payment once they have the insurance certificate in their hands, if this happens insurers default the account within 7 days which will show on CRAs so it is needed to prevent a recurrence of this criminal act.

 

Surely if this were the case the CRA check would be done via the credit supplier, and reflect on the apr of the loan, not on the price of the policy.

 

Policies can be cancelled before they terminate of course.

[BRIGADIER2JCS]

As most of the instalment apps are made online it is part of the insurance application often the insurer provides the credit themselves or via a subsidiary.

 

It is a crime prevention measure if the credit supplier was to allow such actions there would be further repercussions.

[Peterbard]

As most of the instalment apps are made online it is part of the insurance application often the insurer provides the credit themselves or via a subsidiary.

 

It is a crime prevention measure if the credit supplier was to allow such actions there would be further repercussions.

 

Not sure what you mean here, I can see that the cost of the credit would increase based on the credit score, but struggle to see the criminal connection.

I know from experience that if a payment arrangement on car insurance is breached the just cancel the policy.

Police check all insurance through a central data-base to prevent fraud, they do not just take the document at face value.

[BRIGADIER2JCS]

Ok quite simply the payment of motor insurance by instalments has been widely abused, payments being stopped once the driver has the insurance certificate, so the insurers and credit providers work together a s such criminal activity will certainly have consequential costs which will be passed on by higher insurance premiums.

[Peterbard]

Just goggled this.

 

http://www.gmacinsurance.com/legal/creditfaq.asp

 

2. Why do insurers use credit?

 

Auto insurance companies use financial history along with other factors (such as years of driving experience) to properly classify an insured according to his/her potential risk. Numerous studies have shown a very strong correlation between a consumer's financial history and his/her future insurance loss potential. Thus, auto insurance companies believe the use of credit helps to underwrite an applicant at a cost that most accurately reflects that particular applicant's specific risk.

 

Seems like a statistical relationship

[neil6534]

Hi all, I think that the meaning of this thread is becoming a bit lost.

 

The problem is that no matter how you search or get your car insurance, who ever is the provider uses a credit score to determine your premium prior to any choice of a lump sum payment or monthly payments being chosen.

 

When I researched my current insurance my premium came out at around £490. When I changed the following details on the quote form the insurance came out at approx £350.

All I changed was;

Drivers name to my girlfriends

drivers age

all other details such as the car being driven, miles driven per year, accidents and claims, no claims bonus etc were all kep the same. So on the basis that they no longer use gender as a means of setting a premium (in this case it would have been beneficial to be a female) the only conclusion is that the premium is set according to your credit score.

 

The premium is calaculated prior to what ever payment plan you chose.

 

I spoke to my insurance provider and they confirmed this!!!

[Peterbard]

Yes apparently someone has discovered a correlation between the credit rating of an applicant and the prospective claims that will be made against their policy.

Premiums have been weighed to reflect the additional risk.

 

Insurers take many factors into account, I wasn't aware of this one , but it seem to make quite a difference. I am not sure what you can do about it, they will argue that their research and statistical analysis are accurate, and they probably are.