Arguments for the use of credit-based insurance score
- there is a strong correlation between CBIS and the expected costs associated with the risk
- Principle 4 of CAS Ratemaking SoP: rate is an actuarially sound estimate of future costs
- ASOP No. 12, Risk Classification: relationship of risk characteristics and expected cost
- removal of CBIS will not lower overall premium, but only redistribute it so risks with lower expected costs will pay more, and those with greater expected costs will pay less.
- most companies report that the use of CBIS have allowed them to write more risks from the general population