A credible approach: credit-based insurance scoring is an accurate tool that can expand business and keep it strong.

The question ringing in the ears of many independent agents across the country these days is "what does credit history have to do with insurance coverage?" According to a study by Conning Research and Consulting Inc., more than 90% of insurance companies are using credit-based insurance scores to help determine what a customer pays for an insurance policy.

But how does that relate to your agency? And how do you explain the concept to your customers? You, as an agent, want to write more business, and insurance scoring is an accurate tool that can expand business and keep it strong. So when a policyholder asks why credit history is important, keep in mind that insurance scores:

* Are only one of several factors used to determine the cost of a policy, and are used in combination with traditional underwriting factors such as age, losses, and the number of accidents or moving violations.

* Allow insurance companies to offer better rates to customers who are less likely to have losses.

* Allow more companies to offer more products to more people--leading to more choices for consumers.

At Travelers Property Casualty, we understand that there is some confusion among the general public and even some regulators and legislators about credit-based insurance scores and how they're used, so we are very open about our policies and procedures.

We have materials available for agents to provide to their customers, as well as frequently asked questions about insurance scores on our public Web site at www.travelers.com under the heading "Insurance Resource Center."

This site will tell you that an insurance score is a number that predicts the potential for future loss of an individual policyholder. Information used to calculate the score includes payment history, bankruptcies and collections, credit history and type of credit in use. In our case, we do not have, or include, any information related to income, race, gender, religion, marital status, national origin or geographic location. And here we also explain why companies use insurance scores and what protection consumers have against misuse.

So what's the connection? Numerous statistical studies pinpoint a direct correlation between credit history and the likelihood that a customer will have a loss. Therefore, insurance scores allow carriers to set rates that are more accurate and appropriate, and enable carriers to offer insurance coverage to a broader range of customers. What's more, many of these customers benefit from the use of insurance scores in the form of lower prices.

One question often posed is what happens in the case of insurance scoring when policyholders face extraordinary circumstances. Many insurers are working hard to use insurance scores responsibly, and we recognize that sometimes people face difficult circumstances, such as medical collections, divorce or job loss.

At our company, we have created the Travelers Insurance Scoring Resource Center to assist our independent agents and customers with issues like these. The Resource Center will address individual insurance score-related questions and, where appropriate, reclassify the score to benefit the customer.

The center also will work with agents to assist customers in working with credit providers to contest any inaccuracies in a credit report and to have inaccurate information removed.

Policyholders often ask how they can improve their scores. In this regard, agents can help their customers with tips on how to do this, namely, by paying bills on time, keeping credit card balances low, and applying for and opening new credit accounts only as needed. We also recommend that customers periodically obtain a copy of their credit report to check for any inaccuracies.

Insurance scoring is a powerful tool for insurers to use to segment risk, which allows insurers and agents to offer a broader range of products and prices to more consumers. Our company is dedicated to working closely with agents to make sure they feel confident when explaining the practice and the benefits it offers to their customers.

Joseph Lacher is chief executive officer of Personal Lines, Travelers Property, Casualty. He can be reached at [e-mail].