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What is credit-based insurance scoring?

Credit-based insurance scoring is a common rating factor in the insurance industry. It is used to help insurers assess risk and determine premiums. A common misconception is that they function like credit scores used by lenders to predict loan payments. Insurance scores are specifically designed in an effort to predict property and casualty insurance losses.  

How insurance scoring works 

Insurance companies use credit reports and insurance scores to calculate risk. Actuarial data has consistently shown a correlation between these insurance scores and future insurance losses. By using this data-driven approach, insurance companies can: 

• Assess risk more accurately 

• Offer insurance coverage to more consumers 

• Provide fair, actuarially sound rates 

It is important to note that credit-based insurance scores are just one factor among many in pricing decisions. Every insurance policy pricing decision is comprised of a variety of pricing factors to reach the applicable premium.  

The role of LexisNexis Risk Solutions

Many insurance companies, including Indiana Farm Bureau Insurance, use the Attract insurance scoring services provided by LexisNexis Risk Solutions Inc. As a Consumer Reporting Agency, as defined by the Federal Credit Reporting Act (FCRA), LexisNexis Risk Solutions: 

• Delivers millions of credit reports and insurance scores to the insurance industry annually 

• Acts as a reseller of credit reports from the major credit bureaus ( Equifax, Experian, TransUnion) 

• Provides insurance scoring services in compliance with applicable laws and regulations 

Learn more about LexisNexis Risk Solutions on our Insurance Scoring page or at the LexisNexis Risk Solutions website.  

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Inside Story is for educational and informational purposes only. Inside Story is compiled from various sources, which may or may not be affiliated with our family of companies, and may include the assistance of artificial intelligence. While we strive to provide accurate and reliable content, we make no warranties or guarantees about its completeness, accuracy, or reliability, and are not responsible for the content of any third-party sources or websites referenced herein. The inclusion of any content does not establish a business relationship or constitute our endorsement, approval, or recommendation of any third party. Testimonials and examples provided are for illustrative purposes only and do not guarantee future or similar results or outcomes, and may not consider individual circumstances, goals, needs, or objectives. Inside Story does not provide legal, tax, or accounting advice. For individual guidance, please consult a qualified professional in the appropriate field.    

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