Difference between revisions of "McCarty.Credit"
(→BattleTable) |
|||
(30 intermediate revisions by 2 users not shown) | |||
Line 1: | Line 1: | ||
− | Representing the | + | '''Reading''': “Testimony of Kevin M. McCarty, Florida Insurance Commissioner, Florida Office of Insurance Regulation and Representing the National Association of Insurance Commissioners, Regarding: ‘The Impact of Credit-Based Insurance Scoring on the Availability and Affordability of Insurance,’ May 21, 2008,” Subcommittee on Oversight and Investigations of the House Committee on Financial Services, excluding Appendices 1 and 2. |
− | + | '''Author''': McCarty, K.M. | |
+ | |||
+ | [https://www.battleacts6us.ca/vanillaforum6us/categories/mccarty-credit<span style="font-size: 12px; background-color: lightgrey; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 0px;">'''Forum'''</span>] | ||
+ | |||
+ | {| class='wikitable' style='background-color: navajowhite; | ||
+ | |- | ||
+ | || '''BA Quick-Summary''': <span style="color: green;>'''Credit-Based Insurance Scores'''</span> | ||
+ | |||
+ | Representing the NAIC, McCarty presented his views on the impact of credit-based insurance scoring on the '''availability''' and '''affordability''' of insurance. This reading is closely related to [[Kucera.Credit]]. | ||
+ | |||
+ | |} | ||
==Pop Quiz== | ==Pop Quiz== | ||
Line 10: | Line 20: | ||
Based on past exams, the '''main things''' you need to know ''(in rough order of importance)'' are: | Based on past exams, the '''main things''' you need to know ''(in rough order of importance)'' are: | ||
− | * <span style="color: green;">'''arguments against'''</span> use of credit scores ''(see [[Kucera.Credit]] for arguments | + | * <span style="color: green;">'''disparate impact'''</span> of credit scoring on certain classes of insureds |
− | + | * <span style="color: blue;">'''arguments against'''</span> use of credit scores ''(see [[Kucera.Credit]] for arguments <u>for</u> use of credit scores) | |
: {| class="wikitable" style="width: 1200px;" | : {| class="wikitable" style="width: 1200px;" | ||
|- | |- | ||
! style="width: 175px;" | reference !! style="width: 175px;" | part (a) !! style="width: 175px;" | part (b) !! style="width: 175px;" | part (c) !! style="width: 140px;" | part (d) !! style="width: 140px;" | part (e) !! style="width: 140px;" | (part f) | ! style="width: 175px;" | reference !! style="width: 175px;" | part (a) !! style="width: 175px;" | part (b) !! style="width: 175px;" | part (c) !! style="width: 140px;" | part (d) !! style="width: 140px;" | part (e) !! style="width: 140px;" | (part f) | ||
+ | |||
+ | |- | ||
+ | | [https://www.battleacts6us.ca/pdf/Exam_(2018_2-Fall)/(2018_2-Fall)_(03).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2018.Fall #3)'''</span> | ||
+ | || [[Porter.2-Devlpt]] | ||
+ | || [[Porter.2-Devlpt]] | ||
+ | || <span style="color: blue;">'''arguments against'''</span> <br> - credit scores | ||
+ | | style="background-color: lightgrey;" | | ||
+ | | style="background-color: lightgrey;" | | ||
+ | | style="background-color: lightgrey;" | | ||
|- | |- | ||
| [https://www.battleacts6us.ca/pdf/Exam_(2017_2-Fall)/(2017_2-Fall)_(01).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2017.Fall #1)'''</span> | | [https://www.battleacts6us.ca/pdf/Exam_(2017_2-Fall)/(2017_2-Fall)_(01).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2017.Fall #1)'''</span> | ||
|| see [[Kucera.Credit]] | || see [[Kucera.Credit]] | ||
− | || <span style="color: | + | || <span style="color: blue;">'''arguments against'''</span> <br> - credit scores |
|| see [[Kucera.Credit]] | || see [[Kucera.Credit]] | ||
| style="background-color: lightgrey;" | | | style="background-color: lightgrey;" | | ||
Line 28: | Line 47: | ||
|- | |- | ||
| [https://www.battleacts6us.ca/pdf/Exam_(2016_1-Spring)/(2016_1-Spring)_(01).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2016.Spring #1)'''</span> | | [https://www.battleacts6us.ca/pdf/Exam_(2016_1-Spring)/(2016_1-Spring)_(01).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2016.Spring #1)'''</span> | ||
− | || <span style="color: | + | || <span style="color: green;">'''disparate impact:'''</span> <br> - gender |
|| '''credit score vs frequency''' <br> - explain | || '''credit score vs frequency''' <br> - explain | ||
| style="background-color: lightgrey;" | | | style="background-color: lightgrey;" | | ||
Line 37: | Line 56: | ||
|- | |- | ||
| [https://www.battleacts6us.ca/pdf/Exam_(2015_2-Fall)/(2015_2-Fall)_(01).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2015.Fall #1)'''</span> | | [https://www.battleacts6us.ca/pdf/Exam_(2015_2-Fall)/(2015_2-Fall)_(01).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2015.Fall #1)'''</span> | ||
− | || <span style="color: | + | || <span style="color: green;">'''disparate impact:'''</span> <br> - age |
− | || <span style="color: | + | || <span style="color: green;">'''disparate impact:'''</span> <br> - other than age |
|| '''metrics / drivers''': <br> - underlying credit scores | || '''metrics / drivers''': <br> - underlying credit scores | ||
| style="background-color: lightgrey;" | | | style="background-color: lightgrey;" | | ||
Line 56: | Line 75: | ||
| [https://www.battleacts6us.ca/pdf/Exam_(2014_1-Spring)/(2014_1-Spring)_(05).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2014.Spring #5)'''</span> | | [https://www.battleacts6us.ca/pdf/Exam_(2014_1-Spring)/(2014_1-Spring)_(05).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2014.Spring #5)'''</span> | ||
|| see [[Kucera.Credit]] | || see [[Kucera.Credit]] | ||
− | || <span style="color: | + | || <span style="color: blue;">'''arguments against'''</span> <br> - credit scores |
|| see [[Kucera.Credit]] | || see [[Kucera.Credit]] | ||
| style="background-color: lightgrey;" | | | style="background-color: lightgrey;" | | ||
Line 69: | Line 88: | ||
==In Plain English!== | ==In Plain English!== | ||
− | This paper is easy | + | This paper is easy - good bedtime reading. ''(You only have to know the first 11 pages.)'' It overlaps with [[Kucera.Credit]] but focuses more on potential <u>problems</u> with using credit-scoring in ratemaking. |
− | + | :{| class="wikitable" | |
+ | |- | ||
+ | | '''Question''': identify arguments <u>against</u> the use of credit-scoring [Hint: <span style="color: red;">'''FEED'''</span>] | ||
+ | |} | ||
− | + | :: <span style="color: red;">'''F'''</span>requency ''(credit score is correlated only with <u>frequency</u>, not with severity of claims)'' | |
+ | :: <span style="color: red;">'''E'''</span>rrors ''(50% of credit reports have errors, sometimes due to identity theft)'' | ||
+ | :: <span style="color: red;">'''E'''</span>conomic downturns ''(downturns in economy may have a disparate credit impact on vulnerable populations)'' | ||
+ | :: <span style="color: red;">'''D'''</span>iscriminatory ''(credit scoring may lead to rates that are unfairly discriminatory - see below for details)'' | ||
− | [https://www.battleacts6us.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=McCarty&suffix=Credit§ion=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum= | + | : [https://www.battleacts6us.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=McCarty&suffix=Credit§ion=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=1<span style="font-size: 20px; background-color: aqua; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''mini BattleQuiz 1]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.'''</span> |
+ | |||
+ | :{| class="wikitable" | ||
+ | |- | ||
+ | | '''Question''': identify examples where credit scoring can be <u>unfairly discriminatory</u> | ||
+ | |} | ||
− | + | :: '''age''': <u>young</u> people don't have a long credit history, <u>elderly</u> people use credit less often ''(both may result in a lower credit score)'' | |
+ | :: '''poor families''': may use cash versus credit ''(you need to use credit to get a good credit score)'' | ||
+ | :: '''recent immigrants''': may not have access to credit ''(you need to use credit to get a good credit score)'' | ||
+ | :: '''moral/religious beliefs''': certain belief systems may discourage use of credit ''(you need to use credit to get a good credit score)'' | ||
− | + | : [https://www.battleacts6us.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=McCarty&suffix=Credit§ion=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=2<span style="font-size: 20px; background-color: aqua; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''mini BattleQuiz 2]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.'''</span> | |
+ | There are a few <u>miscellaneous</u> items from old exams that are covered in the mini BattleQuiz. Make sure you look at the following problem because it ties together concepts from a few different readings: ''(It's also included in the mini BattleQuiz)'' | ||
− | + | : [https://www.battleacts6us.ca/pdf/Exam_(2014_2-Fall)/(2014_2-Fall)_(02).pdf <span style='font-size: 12px; background-color: yellow; border: solid; border-width: 1px; border-radius: 5px; padding: 2px 5px 2px 5px; margin: 5px;'>E</span>] <span style="color: red;">'''(2014.Fall #2)'''</span> | |
+ | : [https://www.battleacts6us.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=McCarty&suffix=Credit§ion=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=3<span style="font-size: 20px; background-color: aqua; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''mini BattleQuiz 3]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.'''</span> | ||
− | + | : [https://www.battleacts6us.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=McCarty&suffix=Credit§ion=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=all<span style="font-size: 20px; background-color: lightgreen; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''Full BattleQuiz]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.'''</span> | |
==POP QUIZ ANSWERS== | ==POP QUIZ ANSWERS== |
Latest revision as of 21:22, 3 July 2024
Reading: “Testimony of Kevin M. McCarty, Florida Insurance Commissioner, Florida Office of Insurance Regulation and Representing the National Association of Insurance Commissioners, Regarding: ‘The Impact of Credit-Based Insurance Scoring on the Availability and Affordability of Insurance,’ May 21, 2008,” Subcommittee on Oversight and Investigations of the House Committee on Financial Services, excluding Appendices 1 and 2.
Author: McCarty, K.M.
BA Quick-Summary: Credit-Based Insurance Scores
Representing the NAIC, McCarty presented his views on the impact of credit-based insurance scoring on the availability and affordability of insurance. This reading is closely related to Kucera.Credit. |
Pop Quiz
BattleTable
Based on past exams, the main things you need to know (in rough order of importance) are:
- disparate impact of credit scoring on certain classes of insureds
- arguments against use of credit scores (see Kucera.Credit for arguments for use of credit scores)
reference part (a) part (b) part (c) part (d) part (e) (part f) E (2018.Fall #3) Porter.2-Devlpt Porter.2-Devlpt arguments against
- credit scoresE (2017.Fall #1) see Kucera.Credit arguments against
- credit scoressee Kucera.Credit E (2016.Spring #1) disparate impact:
- gendercredit score vs frequency
- explainE (2015.Fall #1) disparate impact:
- agedisparate impact:
- other than agemetrics / drivers:
- underlying credit scoresE (2014.Fall #2) definition:
- cost-based ratesequitable rates:
- 2 conditionstexting
- is it equitableBloom's Taxonomy:
- financial stabilitysee NAIC.IRIS Bloom's Taxonomy:
- proxy variablesE (2014.Spring #5) see Kucera.Credit arguments against
- credit scoressee Kucera.Credit
Full BattleQuiz You must be logged in or this will not work.
In Plain English!
This paper is easy - good bedtime reading. (You only have to know the first 11 pages.) It overlaps with Kucera.Credit but focuses more on potential problems with using credit-scoring in ratemaking.
Question: identify arguments against the use of credit-scoring [Hint: FEED]
- Frequency (credit score is correlated only with frequency, not with severity of claims)
- Errors (50% of credit reports have errors, sometimes due to identity theft)
- Economic downturns (downturns in economy may have a disparate credit impact on vulnerable populations)
- Discriminatory (credit scoring may lead to rates that are unfairly discriminatory - see below for details)
- mini BattleQuiz 1 You must be logged in or this will not work.
Question: identify examples where credit scoring can be unfairly discriminatory
- age: young people don't have a long credit history, elderly people use credit less often (both may result in a lower credit score)
- poor families: may use cash versus credit (you need to use credit to get a good credit score)
- recent immigrants: may not have access to credit (you need to use credit to get a good credit score)
- moral/religious beliefs: certain belief systems may discourage use of credit (you need to use credit to get a good credit score)
- mini BattleQuiz 2 You must be logged in or this will not work.
There are a few miscellaneous items from old exams that are covered in the mini BattleQuiz. Make sure you look at the following problem because it ties together concepts from a few different readings: (It's also included in the mini BattleQuiz)
- E (2014.Fall #2)
- mini BattleQuiz 3 You must be logged in or this will not work.
- Full BattleQuiz You must be logged in or this will not work.