What your auto insurance company knows about you

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policy or submit a claim, you’re probably unaware of the streams of your personal information that flows between an insurance company and private businesses. Mark Twain once wrote that insurance companies are a “power behind the throne that [is] greater than the throne itself,” but that was more than 100 years ago. Today, the true power lies in the hands of the database companies that sell information about you.

Insurance score varieties

From LexisNexis Risk Solutions:

Attract, formerly known in the insurance industry as a CP Attract Score.

From the credit bureaus:

Credit agencies use FICO’s formula to offer scores under the following brand names:

Equifax: InScore
Experian: Experian/FICO Insurance Score at ChoicePoint
TransUnion: FICO Insurance Risk Score

Individual insurance companies:

Some insurers have their own models for developing consumer insurance scores, such as State Farm, Progressive’s A24 and Farmers Insurance Fire & Auto Combined Evaluation Tool.

Scoring your finances

The “credit scores” used by the auto insurance industry are actually “insurance risk scores.” Both scores are based on information contained in your full credit report, but they put weight on different factors in order to calculate a final score. Thus, even if you purchase your credit score from one of the major credit-reporting agencies, you still don’t know your “insurance risk score.”

Craig Watts, public affairs director for FICO (a provider of scoring formulas), says that a credit risk score weights data to determine how likely you are to become seriously late repaying a lender. But insurance scores are used to evaluate your past use of credit to predict how likely you are to make claims in the future. So, says Watts, if you’ve managed your credit well, you’re likely to manage your house and car well, resulting in fewer expensive claims. Insurance scores do not factor in race or income. Credit scores and insurance scores generally move in the same direction as your credit history changes (meaning improving or worsening), but there could be cases where you have credit activity that impacts one type of score more than the other.

The FICO insurance score calculation puts weight on data this way:

Payment history, collections, bankruptcy: 40 percent
Amounts owed: 30 percent
Length of credit history: 15 percent
New credit applications: 10 percent
Type of credit used: 5 percent

Most car insurance companies use insurance scores to place you in a rate class (like preferred, standard or high-risk) and set a price for you within that class.

Supporters of scoring say there is a direct correlation between your score and the likelihood that you’ll make a claim, but critics maintain that it permits insurers to charge higher premiums to lower income households.

Most states have laws that restrict the use of credit scores. For example, many states stipulate that insurers can’t use the scores as the sole basis for setting rates or for refusing to issue you a policy or renew your policy.

If you have some unusual activity within the month before you buy car insurance, your insurance score could drop. Insurers may then consider you a bad risk (where allowed by law) and refuse to sell you a policy, or charge you a higher car insurance rates for it. If you decrease your credit activity and wait a month to purchase your insurance, you could help your chances. Remember that there are many factors that auto insurers use when evaluating you as a customer, including your driving record, your claims history, where you live and your vehicle model.

You, for sale

LexisNexis Risk Solutions, a leading provider of insurance scores, sells Attract Auto Insurance Scores (formerly offered by a company called ChoicePoint, which LexisNexis acquired). Attract scores are based on credit reports. They are used by insurers to help decide whether to sell you a policy and to set your rate. You can order your own Attract score here. It costs $12.95 and allows you to check your insurance score and how it compares to other consumer and your “risk category.”

LexisNexis also sells a product called “Attract with Claims” to auto insurers. It combines credit information and your previous claims history to predict your future claims level. (This report is not accessible to consumers.)

In addition, LexisNexis maintains a database called C.L.U.E. (Comprehensive Loss Underwriting Exchange). The company sells “C.L.U.E. Auto” reports to insurers that contain a seven-year history of claims associated with your auto insurance, including loss types, dates of loss, amounts paid, and your past and present policies numbers, claim numbers and auto insurers. LexisNexis says 99 percent of auto insurers provide reports for the database. You can receive your “C.L.U.E. Auto Report” free once a year through LexisNexis. You can dispute inaccurate information in it, much like a credit report.

Other LexisNexis services to insurers include motor vehicle reports and a “Current Carrier” database that lists your current insurers, coverages and limits.

Insurance Services Office Inc. (ISO) sells insurers access to its A-PLUS (Automobile-Property Loss Underwriting Service) database, which contains three to five years worth of claims information on specific types of automobile and property losses. ISO says 94 percent of auto insurers contribute auto and home claims for the A-PLUS database.

ISO touts A-PLUS information as a way for underwriters and insurance agents to determine whether to sell a policy to an applicant. You can get your A-PLUS report free by calling the A-PLUS Consumer Report Request Line at (800) 627-3487.

In addition, ISO licenses other underwriting products and services such as:

Your motor vehicle record
Your vehicle-registration report, such as your car’s VIN, whether you have regular, dealer or vanity plates, whether the vehicle has been titled as flood damaged, salvage, etc., and other vehicle data
Your credit information (used to generate an insurance score)
“Undisclosed-driver reports,” meaning “hidden drivers” who are likely drivers of the insured car but not listed on policy applications

ISO also sells your “credit loss history score,” which combines claims information from the A-PLUS database with your credit information from TransUnion to create a combination score. The resulting score, along with other factors such as age, type of vehicle, vehicle use, miles driven, helps underwriters decide if they should sell you an auto policy, and at what premium.

Some auto insurance companies have their own “scores”

State Farm — the country’s largest auto insurer — decided to use “prior loss history and certain credit characteristics” to create its own model that helps it determine an underwriting score for a policyholder applying for a homeowners or auto policy.

A State Farm spokesperson says, “It is significant that we are combining credit characteristics and prior claims history for these models and that we have developed the models using our own book of business. Our models are not designed to assess wealth, income or creditworthiness, but focus on the prediction of future insurance losses.”

State Farm adds that it believes the “use of this model will lessen the extent to which those who represent higher potential risk are subsidized by those who represent lower potential risk.”

When you make a car insurance claim

ISO maintains a giant database of more than 500 million claims, called ClaimSearch. It is not used by insurers in deciding whether to sell you a policy or set your rate, but it’s used when claims are made to detect fraud and to help insurers identify policyholder claims histories.

The ClaimSearch system searches the database for other claims made by the same person or business. If a series of claims looks suspicious — for example, the same name appears on all the claims with a different Social Security number — the system alerts the insurer to investigate further. ISO says it receives roughly 50 million claims annually for the database and more than 93 percent of property/casualty insurers use it.

You can request a copy of the ClaimSearch data on you for $20 by calling ISO customer support at (800) 888-4476. You’ll need to fill out a Citizen’s Inquiry Form and provide proof of identity.

Checking your records

Most of the information that insurance companies collect and use for rating purposes is available from government agencies and credit-reporting companies. For example, you can get a copy of your motor vehicle report from your state’s department of motor vehicles and you can get your credit history from:

Equifax, (800) 685-1111
Experian, (888) 397-3742
TransUnion, (800) 888-4213

Penny Gusner

Contributor

Penny is an expert on insurance procedures, rates, policies and claims. She has extensive knowledge of all major insurance lines -- auto, homeowners, life and health insurance. She has been answering consumers’ questions as an analyst for more than 15 years and has been featured in numerous major media outlets, including the Washington Post and Kiplinger’s.