May 6, 2021

Even as traditional financial credit scores may decline during times of economic uncertainty (such as during the 2008 recession or the 2020 pandemic), credit-based insurance scores tend to remain constant. This is due to several observed factors, including increased fiscal responsibility during uncertain times, such as a consistent decline in average debt even in states with high unemployment rates.

Finding stability when the world turns upside down

Disruption was a major theme of 2020 and has continued into 2021. From pandemic waves to stay-at-home orders and economic shutdowns, we’ve been rocked by the shockwaves of COVID-19. Things shifted quickly. Insurance carriers were not exempt from the changes. It was difficult to forecast the pandemic’s impact on new policies and renewal business — while streets were emptied of vehicles and businesses were closed. But carriers could rely on some stability during this unprecedented time.

Though the economy at large was shifting, credit-based insurance scores* used within P&C and life insurance remained stable — and many even improved.  (*Not to be confused with financial credit scores, which focus on credit worthiness and predict bad debt or delinquencies, credit-based insurance scores predict future insurance losses and have been used in insurance underwriting for decades.)

Credit-based insurance scores on the aggregate tend to be very stable over time — and that’s exactly what we’ve seen so far throughout this pandemic.

Hearing what changed…

Throughout last year, media reports offered daily reminders of the impact COVID-19 had on the U.S. economy. Job losses were occurring at a previously unimaginable rate. And across the property and casualty (P&C) and life insurance markets, many questioned how these disruptions would affect credit-based insurance scores.

Insurers had questions about how models might be impacted, and we assured our customers that we were engaged, ensuring continuous monitoring of score trends and understanding of any impacts. LexisNexis® Risk Solutions credit-based insurance score models are continually tested for reliability and optimal performance. And, based on our studies last year (as well as during the 2008 Great Recession), our models have continued to show aggregate stability even during times of overall economic volatility.

…and what remained the same

In short, we’re not seeing a substantial or fundamental shift in the average LexisNexis® Attract™ suite of models or the LexisNexis® Risk Classifier model used by the life industry. Credit-based insurance scores tend to be very stable over time, and that’s exactly what we’ve seen so far, even as much else in the world was turned on its side.

See what else we learned from our data deep-dive in our easy-to-digest e-Book, Stability of Credit-Based Insurance Scores in the Time of COVID-19.