With the use of credit scoring still under attack, the insurance industry would be wise to consider new ways to assess risk, according to an industry actuary.
Roosevelt Mosley, a principal with Pinnacle Actuarial Resources Inc. said insurers will need to develop additional analysis techniques to help them assess risks if they can no longer use credit in the underwriting process.
Mosley said that when credit is removed, insurers need to recalibrate current factors and consider additional variables that may have been deemed insignificant when the credit score was included. "We should focus on the reasons that credit works," he said.
He said insurers should look at other variables that demonstrate the characteristics of responsibility, risk-taking behavior, and stability that go into the insurance scoring model. Payment history, accident and violation history, and number of years an individual has been insured and employed are some of the other variables to consider, Mosley said.