TEXAS STUDY LINKS CREDIT SCORES TO RACE, AGE AND WEALTH

Black, Hispanic and low-to-moderate income policyholders tend to have worse credit histories than white, Asian, older and high-income policyholders, according to a study released yesterday by the Texas Department of Insurance (TDI). The study also found that there was a positive correlation between a poor credit history and the likelihood of making a claim. Lawmakers had initiated the study more than a year ago. The TDI report found that 54% of homeowners’ policies and 82% of motor policies were written by insurers that used credit scores to help them set rates, or to decide whether to offer cover at all. The TDI obtained data for 2.2m policyholders, including six motor credit scoring models and three homeowners’ models. The department said that it would follow up the study with the aim of identifying how much credit scoring actually improved an insurer’s ability to predict losses.