Cyber Week

Monday this week was Cyber Monday. This was the Black Friday equivalent for online retailers. Many online retailers have extended the single day event and have been calling this Cyber Week. We at Fey Insurance bring this up because it is very important for both consumers and retailers to be cautious about identity theft during this time. Earlier this year we posted a blog article about Password Protection and we encourage you to revisit that article for tips on creating secure passwords. Also, below you will find a poem that was posted on cyberinquirer.com and was written by Amanda Lorenz. The poem has a few good tips for online holiday shoppers, so we wanted to share it with you:

Identity Theft: A Christmas Poem
by Amanda Lorenz

Twas the month before Christmas and all through the house,
All the children were networking with the click of a mouse.
Cyber thieves were nestled all snug in their chairs,
Waiting for shoppers to unknowingly share.
As I shopped for him and he shopped for me,
The thieves stole our money and our financial history.
We did not even realize that this information was taken,
And we thought the denial of our credit card was mistaken.
Using Phishing or SMiShing and hacking the links,
Our private information was retrieved in a blink.
Perhaps we should have shopped on a network that was secure,
Or at least checked our credit reports monthly to be sure,
That thieves were not using our names and our faces
To purchase plane tickets to tropical places.
So to all of the shoppers who like to avoid the crowd,
Protect your info this season and make CyberInquirer proud!

Insurance Score, What is it?

When it comes to figuring out what premium an insurance company is going to charge a person to insure them, there are a lot of factors. On a homeowner it depends on the year the house was built, where the home is located, what kind of construction is the house, etc. On auto insurance it was based on age of the driver, type of vehicle, how much you drive the car, what type of limits and deductibles you have, etc.

A number of years ago a new factor was added to this list for both home and auto insurance called insurance score. An insurance score helps insurance companies determine the future likelihood of auto or home claims. The insurance score takes into account two major categories. The first is your past claims history, meaning what claims have been reported and paid by the home and/or auto insurance company.

The second is your financial behaviors. By financial behaviors they mean things like your current outstanding debt, how much credit history you have, how often you pay or not pay bills on time, have you ever foreclosed or declared bankruptcy, how often do you apply for credit card or other loans. It does not factor in, however, your age, race, income level, marital status, etc.

So what does this insurance score do to your insurance premiums? Well, if you have a good insurance score, companies give you a break on pricing because they feel you are less likely to have insurance claims and therefore should be paying less in insurance premiums. If you have a poor insurance score, then they may charge debits to your insurance premium which can then cause your premium to increase. As mentioned earlier, insurance companies feel that if your insurance score is poor then you are more likely to have claims and therefore you should pay a higher premium.

This is great news for those with good insurance scores but bad news for those with poor scores. So, it is important to stay on top of your financial behaviors, not only so you can get a good credit score and better loan rates but also so that you can have a good insurance score and have better insurance premiums. It is important to make sure you monitor your bill paying, keep outstanding debt to a reasonable level and just have a good overall credit history.

One final thought, Fey Insurance Services is not a big fan of insurance scores but it is something that all insurance companies are using. The main reason we are not a big fan of insurance score is that there is no way to inform a customer exactly why their score is what it is. Your credit score is a big factor in determining the insurance score, and it is private information. We prefer methods all parties totally understand. However, as mentioned previously, all insurance companies are filed with the states to be able to use these scores so it is out of our control. We can simply keep you educated on how it can affect you and make you aware of the factor.

Use of Credit Score in Insurance

Here is a message from Dan Kelso of the Ohio Insurance Institute in Columbus:

There's no need to create a "fear factor" when it comes to the use of insurance scores. The Ohio Department of Insurance regulates it, having established a credit insurance rule in 2003. This rule provides consumer protection as it pertains to insurer use of credit and prohibits insurers from using insurance scores as the sole determinant in underwriting or rating decisions.

Before calling for an overhaul to Ohio's process of determining insurance premiums, consumers should weigh The Blade's Oct. 28 guest editorial against their pocketbooks. Ohio has some of the lowest premiums in the country. Our average homeowners insurance expenditure is tied for fifth lowest at $530. The U.S. average is $804. Ohio's $654 average auto premium is 13th lowest, well below the U.S. average.

The Dallas Morning News editorial cited California and Maryland as states to emulate. Consumers are worse off in these states. California's average auto insurance premium is $843 and Maryland's is worse: $949. California's homeowners insurance averages $937 and Maryland's is $721.

States envy Ohio's affordable and competitive market. Consumers benefit from the fact that we have more auto and homeowners insurance carriers than in all but two states.

While the use of insurance scores is greatly misunderstood, the majority of insurance consumers pay less for auto and homeowners insurance with its use.

This isn't on the minds of Ohioans. ODI complaint data shows only 47 related to homeowners insurance costs in 2008. Complaints on auto insurance rates have been declining since 2002 with only 43 last year.

Ohioans aren't penalized by the use of insurance scoring models. In fact, comparing our premiums to states highlighted in the editorial, we should leave well enough alone.