Consumer Rights: Credit Ratings v. Risk Ratings

person1804

I can request my credit rating. You can too.

However, underwriters/insurers are not compelled to reveal my risk rating / my car's risk rating. They are not compelled to reveal yours either.

Why not?

This year, Allianz raised my car insurance premium by over 30%. There was no explanation. No explanation was given when one was sought - on three separate occasions. There have been no spates of car break-ins or thefts in my area in the past year. My driving profile has not changed. I still have a "no claims" history (in fact I have an extra year of "no claims"). I have not been arrested or fined or otherwise in trouble for speeding or any other crime.

I really would like to know how that 30+% is justified. Have I got no "right to know" (under law) in the UK? Have *you* got no "right to know" under UK law (if/when you are faced with the same thing)?

XRS200

I don't believe you have any right to know their commercial decisions on pricing.

You do however have the right to use any other insurer.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6680521/consumer-rights-credit-ratings-v-risk-ratings

No you cant, you get the credit rating that Experian gives you but no lender ever sees that or uses that. They have their own mechanism and Experian just gives them your credit history which they then mix with data they hold, that you have given them, from other sources like Hunter, and come up with their own rating.

No, you have no right to know. If you were to make a complaint that it was, for example, racially motivated and it were to go to the Ombudsman then Allianz would most likely give them the rating factors used but "in confidence" which means the ombudsman cannot share them with you but there response would state that they have been given them and that they can confirm your ethnicity has not been used… you'd really have to be clutching at straws though because no insurer asks for your race and so you would have to claim that they are implying it from your surname… could seem legitimate if you are Patel but a hard push if your surname Mann (common in the UK and India)

Aretnap

You can't request your credit rating. Well, people like Equifax will sell you a "credit score" if you're silly enough to pay for it, but it is just a number that they've made up for marketing purposes. Your "score" has no bearing on whether any particular lender will lend you any particular amount of money at any particular interest rate. They make their own decisions using their own criteria based on the data they hold.

What you can do is request the data that a company holds on you - be it a lender or an insurance company. However you can't demand that they tell you how they actually use that data to decide whether to sell you a loan or insurance - that's a commercial decision for them to make.

The same holds true of anything else you might buy. If you think that bananas in Tesco are too expensive, can you demand that they justify their price to you? Will they tell you what they pay their wholesalers, what the cost of transportation is, what profit margin they are making? Of course they won't - if you don't like the prices in Tesco, your remedy is to go to Sainsburys instead and see if they're cheaper there. So it is with insurance - if you don't like the price, shop around.

dunstonh

This year, Allianz raised my car insurance premium by over 30%. There was no explanation. No explanation was given when one was sought - on three separate occasions. There have been no spates of car break-ins or thefts in my area in the past year. My driving profile has not changed. I still have a "no claims" history (in fact I have an extra year of "no claims"). I have not been arrested or fined or otherwise in trouble for speeding or any other crime.

Why are you making it about you? Insurance pricing is about the collective risk of a group and combinations of groups. It can also be about external factors such as parts supply, cost and availability.

Sometimes you just fall outside of their target market and they cease to be competitive for you. Other times, a change of data supply, software quality and actuarial methodology means that they look at the data differently to how they did in the past.

It could also be that when you bought previously, they were pricing at a loss to buy market share. Now they are not looking to do that and have adjusted their pricing accordingly.

I really would like to know how that 30+% is justified. Have I got no "right to know" (under law) in the UK? Have *you* got no "right to know" under UK law (if/when you are faced with the same thing)?

Why does it matter? Companies are free to set their own prices. If you don’t like it, don’t buy from them. Pick one the others.

Do you get your quotes from a comparison site? Do you scroll to the bottom and see the quotes with some really high premiums and think you would really like to know why they are pricing like that? - no, you just ignore them and look at those that matter.

Aretnap

Actually it strikes me that the MIB are missing a trick. Instead of just letting you do a subject access request for the data held on the Claims and Underwriting Exchange, maybe they should offer a paid for, souped up service where as well as a list of your claims, they give you a random number loosely based on your claims history and tell you that it's your insurance risk rating. Completely meaningless of course, but it seems to be a nice little earner for the credit reference agencies.

Maybe the nearest insurance equivalent is a car's insurance group. A mostly meaningless number uses mainly as a marketing gimmick by people who sell small engined, cheap cars, but people seen to still buy cars with low numbers in the belief that it will mean cheap insurance, then get upset when it didn't.

MyRealNameToo

The MIB has a very odd legal status, even more so after Lewis -v- Tindale, but it is not for profit. Whilst it does have commercial activities, like CUE, all revenue generated by it are used to reduce the levies insurers have to pay. CRAs by contrast are for profit companies

The Thatchems car insurance group provides a reasonable service, mainly aimed at the smaller insurers who dont have books of millions of cars. It is however only a representation of the cost of repairing the car, and to a lesser degree, the security of the vehicle. Certainly something insurers are interested in but if a car is cheap to repair or expensive doesnt really move the needle on the cost of claim when a pedestrian has been hit.

Like the CRAs the insurance group has been sold to be something more than what it is, as you say, the bit that Thatchems dont include is an opinion of what the average person that drives such a vehicle is like and that can move the needle much more because that drives how likely a pedestrian is to be hit by such a vehicle.