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Did you know that insurance companies may be sharing your personal information with each other in order to increase your rates? Most policyholders have no idea and it’s a practice that many are calling foul play.
Information sharing
According to a recent article in the Los Angeles Times, insurance companies may be sharing, selling or purchasing information on your homeowners’ insurance (and sometimes auto, too) to better calculate their risk. Sharing consumer information is a common practice in many industries in order to report on consumer trends and obtain various marketing data. However, insurance companies are taking it a bit farther.
Reporting your data into one of several databanks (the most common are the Comprehensive Loss Underwriting Exchange, or CLUE, and the Automobile-Property Loss Underwriting Service, or A-PLUS) can provide your current insurer with claims information from you old insurer, so you never really get a ‘clean’ record and therefore – lower rates.
The databank can also track an address that has had claims made against it. For example, if the previous owner of your home filed many homeowners’ claims, that information can be used against you – even though you are not the previous owner and may be insured through a different insurance company altogether.
Unfair treatment or just business
Insurance companies say that having access to the nearly 40 million claims files in the databanks is merely a tool to help them properly evaluate their risk. However, consumer advocates don’t agree and have said that insurance companies are treating consumers unfairly by using this information – especially because the carriers are not taking into account that many homeowners make improvements when purchasing a home.
Required disclosures
Most companies are required to disclose to their customers that they share your information. In fact, California recently passed legislation that requires insurers to inform their policyholders of just that. Unfortunately, the language is often buried amongst the usual fine print of the policy and rarely gets read.
The two companies that collect this data (for up to seven years, by the way) are required to disclose this information to you for free once a year – similar to a credit reporting agency. To see what information they have on you, contact them at:
- Comprehensive Loss Underwriting Exchange, which is operated by Georgia’s Choice Point Company: www.choicetrust.com
- Automobile-Property Loss Underwriting Service, which is operated by New Jersey’s ISO Company: www.iso.com
