Policyholders are warming up to credit-based auto rates
Just 36% of consumers said credit scores shouldn’t be used when determining auto rates, down from 69% this past year.
It seems tides are turning regarding consumer sentiment toward the use of credit scores when determining personal auto insurance rates, according to Forbes Advisor, which reported that 42% of policyholders believe credit scores should be factored into auto insurance rates. In 2021, just 22% of consumers said the same.
What’s more, only 36% of those surveyed said they didn’t think credit scores should be a factor in auto insurance rate setting, down from 69% the year prior.
Consumer advocacy groups and some state legislators argue that using credit scores to set rates unfairly increases insurance costs for certain demographics and is discriminatory. Forbes Advisor reported that in the 46 states that do allow credit to be used in auto insurance, insureds with bad credit see an average rate increase of 75% compared with those that have good credit.
Factoring education level
Similarly, twice as many policyholders now say that the education level of a driver should be factored into auto insurance rates, Forbes Advisor found. Just 28% of those surveyed said education shouldn’t be considered, down from 67% the year prior.
Nearly 60% of auto insurance policyholders also think a person’s occupation should be considered by auto insurance companies, up from 36% in 2021.
One area that consumers think insurers should stop using for auto insurance rates is gender, Forbes Advisor reported. More than 60% of those surveyed oppose the practice, including 72% of women, who typically pay less for car insurance.
Getting a fair deal
Auto insurance policyholders also overwhelming find that their insurance rates are fair, with 58% describing their auto insurance costs as “fair” to “very fair.” This is up from last year when just 48% of drivers felt their auto rates were fair or very fair.
In addition to credit-based rates, policyholders are also warming up to usage-based insurance options, Forbes Advisor reported. In 2022, 64% of drivers said they are comfortable with allowing their insurers to closely monitor them in exchange for lower rates for good driving. Last year, 51% of drivers said the same.
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