Credit scoring is an issue, that has polarized the insurance industry. It involves not only the insurers and the agents, but also the customers. The debate is on whether it is appropriate for insurance companies to use credit scores in the process of decision-making. "It is a black box approach to selection and rating, which discriminates among insureds unfairly and is being used as a method to prevent the low income groups from obtaining insurance on the same basis as the rest of the population."

The above mentioned quote is one perception about credit scoring in insurance. The issue of credit scoring has polarized the insurance industry, which involves not only the insurers, the agents, but also the customers. The debate is on whether it is appropriate for insurance companies to use credit scores in the process of decision-making or not.

Insurance decision-making and pricing is no longer governed by the twin factors of Underwriting and rating. Insurance companies all over the world believe in buttressing their decisions by looking outward and rely on insurance credit scores provided by credit rating agencies. For the insurance industry, there is a high correlation of loss to credit score, thus justifying its use. On the other hand, consumers contend that credit scoring is ineffective, irrational, and unfair to certain segments of the population. To understand this battle of statistics and emotion, let us go into the intricacies of `Insurance credit scoring'.