A credit-based “insurance score” uses information from a consumer’s credit report to predict how often he or she is likely to file claims, and/or how expensive those claims will be. 

Studies by government insurance regulators, universities, independent auditors and insurance companies all have shown that an individual’s credit history is a proven, strong indicator of risk.

In July 2007, the Federal Trade Commission released its study, “Credit-Based Insurance Scores: Impact on Consumers of Automobile Insurance.” According to that study, these scores are ‘predictive of the number of claims consumers file and the total cost of those claims,’ and ‘scores also may make the process of granting and pricing insurance quicker and cheaper, cost savings that may be passed on to consumers in the form of lower premiums.’

Insurer use of credit is expressly permitted and governed by the federal Fair Credit Reporting Act (FCRA), which provides numerous consumer protections and benefits under the law.  Additionally, the majority of states have enacted requirements for the use of credit scores based on the National Conference of Insurance Legislators (NCOIL) model.

AIA has made it a top priority to protect the insurers’ ability to use effective credit-based insurance scoring and to promote the increased benefits passed on to consumers.

Educational Materials:
Consumer Brochure
Consumer Brochure (En Espanol)
Agent Brochure
Federal Fair Credit Reporting Act
Links to Other Resources