Allstate's Credit Rating System (Pt 1): Trying to Get Answers

So many things we just ignore and take for granted are valid and logical, until they affect us and we stop to look deeper. Most companies count on people not doing this, and so we are therefore duped time and time again just because we're too lazy to stop and question.

I target this post at Allstate because they are my company, and I have been with them for longer than I can recall (at least 15 years), but I am pretty sure the majority of insurance companies pull this quick one over on people too. In all of that time I have always paid on time, usually with their auto pay feature. I have had very few claims (I don't recall ever claiming one on the car, but do recall one when lightning struck near our house). So, I have both car and home insurance through them, never been late on payment, and never had any real claims filed. I qualify for most all discounts they offer, and get all kinds of bonuses they offer. So, imagine my surprise when my recent policy renewal saw a decent jump in my premium.

I called my local agent and asked why, and they tell me they couldn't tell for sure, but that it is most likely related to my credit report, which they look at about every 3-5 years. If something had changed on it in the past 3-5 years, that is probably what caused the increase. I requested to know more, and specifically what on my credit would cause such an increase. My credit score tends to be 720 or better, so I was a little baffled. I was told I had to contact the home office for more details, and they only way to contact them is via mail. Really?!? In this day and age, they are only reachable by snail mail?


Well, I wrote and requested a response from them within the week. Surprisingly they actually contacted me the first of the following week, so now I had someone on the phone. I posed my questions, but not surprisingly, I got nothing but lame answers hiding behind "policy" and "our procedure." No answers of any sort. I pushed and pushed, finally she agreed to send me in writing some additional info that would have some of my personal info on it that played a part, as well as their credit report rating policy.

About a week later I got what is basically a canned form response with an attached report summary detailing many marks from my credit report that they used to grade my ranking. It was a start, and I used it to begin my research, which, as I got deeper into, became very concerning and perplexing as to what the heck their system was even using as consideration.

But the first concern I had was from their opening form letter, where they state it is common practice for insurance companies to use credit scoring in their rate decisions. I had been told this on the phone, but glossed over it, but here they are saying:

Credit information has proven to be a strong predictor of insurance losses. In fact, our own credit experience confirms the connection between credit report information and the likelihood of experiencing an insurance loss. Insurance premiums are set based on the likelihood of loss.

Now, when this line was spewed to me on the phone, I asked for clarification as to how there is a correlation. Plain and simple, I asked for exactly how my financial credit affects my driving? I was a bit astonished by the illogical answer I was given. Basically she explained it like this, "people which bad credit tend to be under more stress, which affects many areas of life, including driving skills." I called BS, and then asked her, "so, someone with bad credit is under more stress, causing potential driving issues, so your response is to tack on MORE stress by causing them to pay HIGHER rates? How does that make any sense?" Of course I got no answer - their logic can't give one.

In doing some additional online research, I ran across a similar silly comment on the topic:

The reason that some insurance companies use credit information is because there is a direct correlation between consumer's credit history behaviors and expected claims that may occur. Therefore, they feel that people with better credit behavior are less likely to have severe insurance losses.

So, I set out to respond to their form letter and information provided, and what ended up being a four page single spaced response addressed this issue first and foremost. I asked them to please supply me with the case studies and reports that justify Allstate's claim that "our own credit experience confirms the connection between credit report information and the likelihood of experiencing an insurance loss."

There is much more I requested and pointed out, and I will write about them in upcoming segments, but on this point the respond is typical. First let me not, I never got a response to my letter. I mailed a physical copy, as well as emailing a PDF version to both the lady at the home office as well as my local agent. I followed up to her with at least three emails and a couple phone messages over the next two months, but got zero reply to anything.

Today, i called the number, got to an operator and asked for a supervisor. I of course had to give the name of the person I had initially spoken with so they could get me to a supervisor, but they said they had to put me through to her first so that I could get to the correct supervisor. Well, low and behold, she answered this time, Her answer to my inquiry about the case studies were that neither she nor anyone in the company would provide such info to the public. Of course not, because it is all based on false claims and deception in order to charge more money.

I demanded to speak to her supervisor, who she informed me would tell me the same and that he was only their to supervise her and her co-workers work, not to have authority to additional information. So I said I'd like to speak with HIS supervisor then, because SOMEONE has answers, and they cannot keep hiding behind illusions and smokescreens like this. I was told to contact the main home office (another main office somewhere). I told her NO! I had done all of the legwork I planned on doing. I have written twice, called numerous people and getting no response, and told HER to get someone to call me by week's end. She said okay - but I ain't holding my breath.

This is only the tip of the scam ice berg - see part two.