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How do you rate? The elusive C.L.U.E. number

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By: Rick Richards, Consumer Insurance Guide September 10, 2011 0

Insurance and clue reportsIn the board game Clue, answers are difficult to find, but ultimately, information is found so you can figure out who did it, with what weapon and in which room.

But when it comes to figuring out your personal C.L.U.E. number (we all have one), the information isn’t quite so straightforward. While you might be able to find out what your number is, details of what goes into compiling that number are shrouded in secrecy.

Tina Friery, research director for The Privacy Rights Clearinghouse (www.privacyrights.org) in San Diego, Calif., says the secrecy around how an individual’s C.L.U.E. number is obtained is a concern for the organization and should be a concern for consumers.

“There’s a lack of transparency in how it’s obtained,” says Friery. “We simply don’t know what goes into the score. We think your credit rating is figured into it, but what does your insurance score have to do with your credit score?”

An individual C.L.U.E. number (it stands for “comprehensive loss underwriting exchange”) is something insurance companies use to determine rates for potential clients on everything from homeowners insurance to auto insurance to mortgage insurance and ultimately, whether a person even qualifies for insurance.

The Privacy Rights Clearinghouse offers a comprehensive C.L.U.E. fact sheet .

According to the Wisconsin Commissioner of Insurance website, a C.L.U.E. report “contains information such as name, date of birth, and policy number, claim information such as date of loss, type of loss and amounts paid, and a description of the property covered. For homeowner’s coverage, the report includes the property address, and for auto coverage, it includes specific vehicle information.”

Information in the database, which is managed by Lexis/Nexis in Atlanta, includes any claims filed by a customer during the previous seven years.

Lexis/Nexis declined to discuss any details about C.L.U.E. numbers.

The Wisconsin Commissioner of Insurance office says insurers have always used loss histories as a primary underwriting and rating factor for homeowner’s insurance policies, but previously had to do the digging themselves by looking through public records, interviewing the applicant and asking for information from previous insurers.

C.L.U.E. numbers essentially act like credit scores in determining eligibility, but instead of a loan, the number puts a value on the insurance worthiness of a consumer.

Friery says that until the recent economic meltdown, organizations that compiled ratings numbers on consumers operated mostly in the shadows. But now that Congress has gotten involved in more closely monitoring the banking industry, some organizations have been required to be more forthcoming on how the numbers are compiled.

“Still, there is secrecy surrounding the factors that go into a C.L.U.E. number,” says Friery. “There is no law that says insurers have to give you information on insurance scores.”

As a privacy advocate, Friery says that raises a red flag. She says that while insurance companies have ready access to insurance numbers and ratings, consumer don’t – even when their own number and how it was determined.

“Insurance is a touchy subject when it comes to Congress getting involved because insurance companies typically have been regulated by the states,” says Friery. For organizations like The Privacy Rights Clearinghouse, that means dealing with 50 state legislatures.

“We’re doing a lot of education because sometimes when consumers learn about this, they carry a lot of weight with their legislature,” says Friery. “We urge people to ask a lot of questions.”

For instance, the website Bankrate.com says homebuyers who try to buy a home without accessing C.L.U.E. information could find themselves in financial trouble – even if they have never filed a claim. They could be rejected for insurance because the previous owner of the home they want to buy had a poor C.LU.E. rating.

Any number of things could cause a home to have a poor rating, from being in a less-than-desirable neighborhood to having several claims filed by previous owners. A C.L.U.E. report could show insurers that extensive work to remediate mold was done on the property, but that’s information that isn’t disclosed to consumers.

Friery says the three-digit C.L.U.E. number tells a lot and people should know the details about that number when they go shopping for a car, mortgage or anything else that requires insurance.

“Our view is that any time a compilation of personal information is done, it should be transparent,” says Friery.

She says the Fair Credit Reporting Act allows individuals to access their C.L.U.E. number by writing to C.L.U.E. Inc. Consumer Disclosure Center, P.O. Box 105295, Atlanta, GA 30348-5295, or by calling toll-free 1-866-312-8076.

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