IOWA INSURANCE INSTITUTE POSITION ON CREDIT SCORING

The Property/Casualty insurers making up the Iowa Insurance Institute have found the use of credit scoring to be an invaluable underwriting and pricing tool for the selection of risk. Its use is demonstrably effective in predicting the risk of loss. Moreover, policyholders benefit from the use of tools that facilitate accuracy in risk classification and pricing. There is much evidence that credit - based scores correlate with lower insurance risk; indeed, the majority of consumers pay lower premiums when credit information is considered. As indicated, it provides predictability thereby allowing insurers to rate appropriately.

For these reasons, the Institute must oppose arbitrary laws and/or other barriers to legitimate practices and tools such as credit scoring.