@Anonymous wrote:
Why are store cards viewed negatively by the insurance industry? Also, is that referring to the insurance industry as a whole, or a certain subdivision (health/home/auto)? What difference would it make to an insurance company whether the cards are store or major network? (genuine questions, not trying to sound like a smart-allec)
The short answer is simple: because the statisticians who work for the insurance industry have demonstrated (to their internal satisfaction) that an insurance company tends to lose money when an insured person has store cards. It could be that people with store cards get in more auto wrecks,or that they are more likely to be at fault or that they are more likely to file claims in general or that the claims are more expensive. Could be something else I have missed.
To find out the details you'd have to talk to one of their statisticians. I am not sure they have published the exact nature of the additional cost burden that such customers entail to the insurance company. But apparently it is real.
I think store cards are looked at as a problem for both auto and home. Contributor Thomas Thumb knows quite a bit about this.
There are other surprising ways that the insurance industry looks at your credit reports, things that you wouldn't guess at first. For example, they ding you if your oldest account is an installment loan, rather than a credit card. They also dislike it if you have credit accounts with auto stores, like Pep Boys or Autozone.
