New rates approved in the State of Maine for Homeowners (HP), Personal Auto (PA) and Personal Package Policies (PPP)
The Bureau of Insurance for the State of Maine has approved new rates for homeowner, personal auto, and personal package (home & auto) policies for Union Mutual Fire Insurance Co. and New England Guaranty Insurance Co Inc. The changes are effective December 22, 2009 for new business and March 8, 2010 for renewal business.
The filing provides for a 7% across-the-board cost increase for auto coverage, a reduction in the automated inflation guard endorsement from 6% to 4% on homeowners coverages and the use of insurance scoring credits and debits. The companies estimate that more than one-half of their HP, PA and PPP policyholders will see a decrease in their premium based on these changes.
"Our results in Maine over the past several years required us to take these steps," said company president and CEO John H. Fitzhugh. "There is a demonstrated correlation between insurance scores and claim occurrences. Most insurance companies use this methodology in Maine and we found that our results were being adversely affected by not integrating insurance scoring in our rates."
To assist in the transition to insurance scoring, agents are being provided with renewal rate indications 75 days in advance of renewals so that policyholders may be informed of the estimated change in their premiums, up or down. Policyholders who would like to know the impact of these rate changes should contact their Independent Insurance Agent sixty days or so before their policy expiration date.
Union Mutual of Vermont Companies uses ChoicePoint, a LexisNexis Company, to provide insurance scores. An insurance score is a numerical value associated with an individual based on the evaluation of his or her credit report and is a predictor of the likelihood of a future insurance loss. A credit report is a history of individual's financial performance. Statistical correlations have been proven to exist between various characteristics contained in a credit report and the frequency of insurance losses. An insurance score summarizes that loss potential. There are different scores for home and auto risks.
It is important to distinguish between a credit score and an insurance score. The two are not synonymous. While a credit score is a reflection of an individual's credit rating, an insurance score is a predictor of future insurance loss. An individual's credit report may contain no negative factors from the standpoint of decisions made with respect to the granting of credit, but at the same time could indicate a greater or lesser degree of risk that an insurance loss will occur. Further information can be found here.
Insurance scoring, and all other underwriting eligible rating factors approved in Maine, are used to determine a policyholder's final premium. This rating process helps distribute insurance costs fairly among all policyholders and reflects the proper premium for each insurance risk. Policyholders with no insurance score will receive neither a credit not a debit based on the companies' filing.
