I have been a long time customer of American Family Insurance. Although I have had no complaints about their service or their rates until now, I found out that because American Family Insurance is loosing profits to other companies they have adopted the policy of basing rates for insurnace on credit scores as a way to increase their revenues.
When the company sent me my warning letter, I called the rate increase hotline to complain about the rate increase, something they indorsed if you disagreed witht he rate change and the woman I spoke with was not only rude but down right beligurant, stating that "Most companies are using this system to base rates from. We aren't doing anything illegal, we have checked with the current laws." Illegal no, unethical yes.
Insurance premiums, in an ethical sense, should be based on your previous insurance history NOT wheither you are a poor financial planner or not. What made me even more irrate was the fact that the hotline was suppose to be set up to get the facts about what was going to change, which was never explained to me. In essence the hotline was another fluff tactic used to make you think they cared about their customers which I belive they do not. Just a profit.
Wouldn't it have been a big win for American Family Insurance to say "Hey, most insurnace companies base rates off of credit scores, yet we believe that you the consumer are more important than that and only base scores off of your previous insurnace history. Wow would they have had a rush of people trying to get insurance with them and profits still would have gone up without having to screw America.
Per about.com
"Using a Credit Score for an Insurance Quote and an Insurance Policy Premium is Unfair.
Critics feel using a credit score for an insurance quote or insurance policy premium is unfair and hurts only the working class. A great deal of consumers that have a low credit score are blue collar workers. Opponents argue that the low economy has put a strain on the large amount of working class in America. While struggling to pay for basic necessities they may miss a few payments, which in turn could make their insurance policy premium or insurance quote skyrocket.
In many areas public transportation is not readily available and insurance is a necessity. Also, in the case of many Americans who have no health insurance, a medical emergency could be even more devastating when one is having a hard time paying the medical bills and then come to find that their insurance policy premium has been raised tremendously because of a few missed medical payments. Opponents feel the new credit score system by insurance companies just makes the working class fall even further behind."
According to Consumerreports.org
"FTC Study Confirms That Credit-Based Insurance Scores
Mean African Americans & Hispanics Pay More for Auto Coverage."
(((link redacted)))
If your rates have gone up due to this practice I encourage you to find a company that does not use credit scores to base your premiums on.
tapasman
Madison, Wisconsin
U.S.A.
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