A recent study by the Federal Trade Commission (FTC) determined the use of credit scores by automobile insurance companies has a strong relationship to the risk of loss of a driver. The FTC found that use of credit in the underwriting process increases the availability and affordability of insurance for most consumers. This finding is supported by similar studies conducted by the Property Casualty Insurers Association of America (PCI). "Using credit information makes underwriting and pricing more accurate, and results in many consumers paying less for their automobile and homeowners insurance policies, " said June Holmes, interim CEO for PCI.
Insurers have found the use of credit scores, when combined with other underwriting tools like driving record and driver age, help insurers better predict who the most profitable policyholders will be, and apply the best rate to those drivers. The use of credit scores in auto underwriting has also me insurers more confident to take on high-risk drivers. Insurers now feel they have an objective and statistically sound way to qualify those drivers and feels sure they are collecting an adequate premium. So, while the cheapest rates cannot be offered to all drivers, those drivers that most deserve the best rates can feel confident they are paying a fair price associated with their underwriting characteristics, and drivers with less positive underwriting characteristics can be more confident in finding auto insurance available to them.