Credit Scoring
The goal of every insurance company is to correlate rates for insurance policies as closely as possible with the actual cost of claims. If insurers set rates too high they will lose market share to competitors who have more accurately matched rates to expected costs. If they set rates too low they will lose money.
This continuous search for accuracy is good for consumers as well as insurance companies. The majority of consumers benefit because they are not subsidizing people who are worse insurance risks — people who are more likely to file claims than they are.
The computerization of data has brought more accuracy, speed and efficiency to businesses of all kinds. In the insurance arena, credit information has been used for decades to help underwriters decide whether to accept or reject applications for insurance. Now advances in information technology have led to the development of insurance scores, which enable insurers to better assess the risk of future claims.
An insurance score is a numerical ranking based on a person’s credit history. Actuarial studies show that how a person manages his or her financial affairs, which is what an insurance score indicates, is a good predictor of insurance claims. Insurance scores are used to help insurers differentiate between lower and higher insurance risks and thus charge a premium equal to the risk they are assuming.
Statistically, people who have a poor insurance score are more likely to file a claim. Insurance scores do not include data on race or income because insurers do not collect this information from applicants for insurance.
Tuesday, March 27, 2007
Saturday, March 24, 2007
Did You Have Substantial Property Damage in 2006?
You May Be Able to Deduct a Portion of Uninsured Losses from Your Taxes; Document Unreimbursed Losses, Including Deductibles, Recommends the I.I.I.
NEW YORK, March 26, 2007 — With less than a month until tax day, taxpayers are sifting through their files to assess last year's gains and losses. If you suffered a loss of personal property not entirely covered by insurance, a portion of the unreimbursed loss may be an allowable deduction on your federal income tax return, according to the Insurance Information Institute (I.I.I.).
“If your home, car or boat was damaged or destroyed by a windstorm, fire, flood, vandalism or other sudden and unexpected disaster, you may be able to deduct a portion of the loss from your taxes,” said Jeanne M. Salvatore, I.I.I.'s senior vice president, public affairs.To qualify for the deduction, these losses usually need to be substantial, said the I.I.I.
If you were significantly underinsured or had a large catastrophe deductible, you may have a sizable unreimbursed casualty loss. “Generally, you can deduct the loss to the extent it exceeds 10 percent of your adjusted gross income, less one hundred dollars," said Anthony Orlando, of the New York based accounting firm Feuer and Orlando LLP. “A special provision, however, was recently enacted for the victims of Hurricanes Katrina, Wilma and Rita. Losses incurred during those storms do not have to exceed 10 percent of adjusted gross income to be deductible. You would have to file amended tax returns for those years in order to take advantage of this.”
"If the property is used in a trade or business, slightly different rules apply, so it is important to ask your tax preparer for assistance,” Orlando noted.“Be sure to collect all receipts, insurance statements, police reports (if appropriate) and other documentation and present it to your tax preparer to see if you qualify,” said Salvatore. And, according to Orlando, medical expenses exceeding 7.5 percent of your adjusted gross income may also qualify for a deduction.
If you prepare your own tax returns, be sure to review the "Nonbusiness Casualty and Theft Losses" and Publication 502 on Medical and Dental Expenses for 2004, available on the Internal Revenue Service Web site ( http://www.irs.gov ). You can also contact your state income tax bureau to learn more about both the federal and state guidelines for this deduction. For more information about insurance, visit the I.I.I. Web site, www.iii.org.
The I.I.I. also has free, downloadable software for creating a home inventory, available at http://www.knowyourstuff.org . This can help consumers keep track of the value of their personal possessions when filing claims and substantiate losses if they suffered an unreimbursed insurance loss.
NEW YORK, March 26, 2007 — With less than a month until tax day, taxpayers are sifting through their files to assess last year's gains and losses. If you suffered a loss of personal property not entirely covered by insurance, a portion of the unreimbursed loss may be an allowable deduction on your federal income tax return, according to the Insurance Information Institute (I.I.I.).
“If your home, car or boat was damaged or destroyed by a windstorm, fire, flood, vandalism or other sudden and unexpected disaster, you may be able to deduct a portion of the loss from your taxes,” said Jeanne M. Salvatore, I.I.I.'s senior vice president, public affairs.To qualify for the deduction, these losses usually need to be substantial, said the I.I.I.
If you were significantly underinsured or had a large catastrophe deductible, you may have a sizable unreimbursed casualty loss. “Generally, you can deduct the loss to the extent it exceeds 10 percent of your adjusted gross income, less one hundred dollars," said Anthony Orlando, of the New York based accounting firm Feuer and Orlando LLP. “A special provision, however, was recently enacted for the victims of Hurricanes Katrina, Wilma and Rita. Losses incurred during those storms do not have to exceed 10 percent of adjusted gross income to be deductible. You would have to file amended tax returns for those years in order to take advantage of this.”
"If the property is used in a trade or business, slightly different rules apply, so it is important to ask your tax preparer for assistance,” Orlando noted.“Be sure to collect all receipts, insurance statements, police reports (if appropriate) and other documentation and present it to your tax preparer to see if you qualify,” said Salvatore. And, according to Orlando, medical expenses exceeding 7.5 percent of your adjusted gross income may also qualify for a deduction.
If you prepare your own tax returns, be sure to review the "Nonbusiness Casualty and Theft Losses" and Publication 502 on Medical and Dental Expenses for 2004, available on the Internal Revenue Service Web site ( http://www.irs.gov ). You can also contact your state income tax bureau to learn more about both the federal and state guidelines for this deduction. For more information about insurance, visit the I.I.I. Web site, www.iii.org.
The I.I.I. also has free, downloadable software for creating a home inventory, available at http://www.knowyourstuff.org . This can help consumers keep track of the value of their personal possessions when filing claims and substantiate losses if they suffered an unreimbursed insurance loss.
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