Why does an insurer want to do a Credit Check

[Bowler]

As title really

Any insurance guru's in?

Why is that when I speak to a broker, they ask permission to do a credit check on me? This is just asking for a quote, not asking about ways to pay. FFS, I only want a car insurance quote, not a loan/overdraft/mortgage

Is this about pre-empting ways to pay, or is there something more sinister going on, like bad credit = higher risk?

Huh?

[GG89]

I haven't had it personally but it would not surprise me one bit if the scum that are insurers loaded premiums for dodgy credit ratings.

[Steffan]

Bowler said:

As title really

Any insurance guru's in?

Why is that when I speak to a broker, they ask permission to do a credit check on me? This is just asking for a quote, not asking about ways to pay. FFS, I only want a car insurance quote, not a loan/overdraft/mortgage

Is this about pre-empting ways to pay, or is there something more sinister going on, like bad credit = higher risk?

Huh?

Probably to assess the risk of deferred payment.

It is a very basic test which also confirms whether you are registered at the postcode you are using.

IMO this is a perfectly reasonable request by a responsible company.

I see no ulterior motive only reasonable prudence in business.

But then I am a retired Chartered Accountant. Pretty risk averse!

[randlemarcus]

Steffan said:

Probably to assess the risk of deferred payment.

It is a very basic test which also confirms whether you are registered at the postcode you are using.

IMO this is a perfectly reasonable request by a responsible company.

I see no ulterior motive only reasonable prudence in business.

But then I am a retired Chartered Accountant. Pretty risk averse!

Deferred payment risk ought to be assessed at the point where deferred payment premiums are being calculated.

Identity verification is a separate service available from the likes of Experian, and DO NOT leave a makr on your credit record (unlike a credit check).

Not a reasonable request, IMHO, but will save a couple of quid for the company. I'd therefore be minded to agree with the "no ulterior motive" part, and replace it with ignorance.

[0a]

randlemarcus said:

Deferred payment risk ought to be assessed at the point where deferred payment premiums are being calculated.

Identity verification is a separate service available from the likes of Experian, and DO NOT leave a makr on your credit record (unlike a credit check).

Not a reasonable request, IMHO, but will save a couple of quid for the company. I'd therefore be minded to agree with the "no ulterior motive" part, and replace it with ignorance.

Agreed. I worked for a price comparison site and it isn't well know that many of the insurance companies they use will do a basic credit check for a quote. However this isn't the worst thing, they will do the same when the comparison site does this again a year, 2 years, 3 years later for their CRM email.

I didn't believe this so checked whether it was the case personally.

[Chris_]

A credit does not need to be performed to check an address. All the credit reference companies offer ID checking to establish identity (including address, electoral roll etc). These don't involve a credit check and don't leave a "foot print" nor affect your credit score.

[0a]

randlemarcus said:

.

Identity verification is a separate service available from the likes of Experian, and DO NOT leave a makr on your credit record (unlike a credit check).

Steffan, from my time in the industry there was some reluctance to use this amongst insurers and various agreements in place so they did not use this service.

It was worth more to have the information that a customer had done many quotes of used a comparison site than the cost of a full check. Therefore an agreement on full checks. The background to this is that insurance companies lose money on a customer in the first year - therefore dislike customers who "churn" which comparison sites encourage.

[Jasandjules]

My approach to this would depend on how a***y I wanted to be. At this point I'd just tell them no, there will be no credit check for a simple quote request. If they don't wish to quote on this basis then I'd be moving on.

[omgus]

If you are using a broker and choose to pay monthly you may find that you enter into a credit agreement for the first year.

The broker pays the full premium upfront, then charges you a certain extra percentage like a loan.

[WanThyme]

I can honestly see someone's credit rating effecting the price of insurance (and do tens of times a day)

I've always assumed someone with a very poor credit rating (unable to obtain credit of any sort), insuring a £5000 car (inherited, say), that all of a sudden needed £4000 for an unseen bill, would be much more likely to have their car disappear, than average joe.

I'd also think this holds ground, too. I have no problems with it (albeit I have a far less than perfect history). I'm aware that with certain providers I'd pay more than Richard Branson (should he live at my address and insure my car etc).

Just one of those things.