Do insurance companies share information?

Insurance Q&A: “Do insurance companies share information?”

They sure do, but not in the manner you may be thinking. So, how do car insurance companies share information? Insurance companies don’t contact one another to discuss an individual’s motor vehicle records and insurance claims history in order to determine their insurance rates for coverage.

Rather, virtually every insurance company “subscribes” to a service and purchase reports one at a time for underwriting and pricing purposes. It’s all done electronically these days. So when you file a claim, even a small one, with your current insurance policy, it’s registered in the claims system other companies can then pull your driving record from.

How do insurance companies share information?

Insurance companies order reports and apply them “in the background” while your policy is being rated using an insurer’s computer software. If you work with an insurance agent, they would also potentially go into your state’s system to check for tickets and other incidents. They would also order the CLUE report through the auto insurance company’s website.

Insurers spend BIG dollars every year “ordering” these reports, which depending on which state you reside, can cost as much as $7.00 each. This is why an auto insurance company will typically run these reports when you get your initial quote. But as long as you pay your premiums on time and otherwise do what you’re supposed to, they’re unlikely to run it again.

It doesn’t sound like much until you take into account that a particular insurer may have to order several thousand per day, and certainly don’t sell every policy they quote.

Do car insurers share information about quotes?

Keep in mind, that insurance companies don’t inform each other when you get new quotes. It’s just things directly related to your driving record and how long you’ve been with your current auto insurance company.

Do health insurance companies share information?

There are no restrictions under HIPAA for accessing health records with specific identifying information removed. Your health provider can also share your information about your health with your insurance company for billing purposes. They can access your record while doing an audit.

So, every insurer has access to medical data that exists about you. Moreover, they talk with doctors and hospitals, they examine your records, they talk to your dentist if necessary and of course, they talk to each other.

What driving reports are available?

So how can insurance companies share information? Your motor vehicle record (MVR) and CLUE report are the two most common records dug up to determine if a particular company will insure you, and if so, how much they’ll charge for coverage.

It’s becoming increasingly more common for credit history, known as an insurance score in the industry, to be used as well. Not all companies do it. But some want to measure the likelihood that you’ll pay your premiums on time, and a bad credit score could be seen as a sign of riskier behaviour in general. At the very least, some companies will require a deposit upfront before issuing you coverage.

Your insurance score can result in as much as a 35% swing in your insurance premium, so it’s hugely important!

Is there any way around driving reports?

If you are hoping to change insurance companies to “get around” a ticket or an accident, you’re likely out of luck. The entire purpose of these reports is to make sure (as accurately as possible) that an insurer is collecting the correct premium based on the risk you represent to their bottom line…in the form of insurance claims.

The more tickets and accidents you’ve got on your record, not to mention the less perfect your credit history, the riskier you are to the insurer.

More Risk = Higher Premium

There are some companies out there that will take your word for it when asking about claims history.

But you will only find this with the true non-standard insurance companies and it doesn’t necessarily lead to a lower premium, as they price accordingly. This means they “build in” premium to every policy, as they assume their clients fit the non-standard program for a reason.

Are there other ways to save on your auto policies?

Often, it’s the people who only have one accident or ticket who are the most worried. There’s something about being so close to a perfect record and paying the extra premium because of one mistake. This might also apply to people who previously had a lot of tickets, but who have made significant efforts to drive safer.

You can visit a local independent insurance agent who represents several insurers or put your zip code into our calculator to get quotes from a few companies. Each insurer has a different “risk appetite,” which means they may actually be seeking to insure someone with a less-than-perfect driving history. You won’t know until you try.

Rates are low at the moment, so switching insurance companies could save you a lot of money.

When switching, be open to options like telematics programs with your auto insurance policy. Letting an insurance company track your driving behaviours for 90 days could get you an immediate discount and a bigger discount after the 90 days by allowing insurance companies to measure the risk you present as you drive right now.