What is the FICO file and what is it used for?

As you delve into community management, you face key concepts like the FICO file, vital in property insurance. This element not only affects how your community is perceived by insurers but also plays a decisive role in the conditions and costs of the insurance you can obtain. Understanding the FICO file is crucial for making decisions about your building’s protection. In this article, we tell you everything you need to know about the FICO file and why it’s important to understand it before insuring your community.

What is the FICO file?

Firstly, it’s important to know this term: FICO stands for Informative File of Communities. It is a database developed by the international company IBM and managed by ICEA (Cooperative Research between Insurance Entities and Pension Funds). It is subscribed to by 14 insurers representing more than 70% of the Spanish market.

This file is a source of information exchange between companies about the claims occurring in the insured communities of neighbors. Only subscribed insurers can access the information, and at the same time, they are obliged to upload the claims data of their policies.

Specifically, it provides information about communities considered high-risk in terms of claims. That is, those policies with a ratio higher than 90% in claim payments compared to the net premium.

Thanks to this information, insurance companies can reduce the risk of their policies and improve financial results. Both the data upload and the use of the information for granting insurance or setting premiums are entirely legal in our country.

Data collection is carried out on a monthly basis. Each company sends a report in this period with the cancellations of high-claims policies. From that moment, the affected building is registered in the system for a period of two years. After this time, the report is removed from the file.

Why is it interesting to know the FICO file in a community of property owners?

Knowing if your community is listed in the FICO is crucial when contracting insurance, usually a task for the president. Having a file in the system, the company may refuse to insure the risks, increase the insurance premium, or exclude certain types of claims. This last practice is quite common and affects the following cases:

• Water damage: It is one of the most common claims in buildings and one that costs insurance companies the most. Often they are caused by poor maintenance or construction defects. It is one of the most common reasons for communities ending up in the file.
• Civil liability for water damage: It’s not just about the claim itself but also if it causes damage to third parties, such as homes through which the pipes run. It’s another of the compensations that are often excluded.
• Civil liability for detachments: Lack of maintenance on the facade can cause parts of the balcony or the roofs to detach. Another common cause of exclusion. This means that the owners must face repairs and compensation in these cases. Your community’s inclusion in the file poses a greater difficulty when contracting comprehensive insurance for the building.

How to know if a community is included in the Community File?

It’s one of the most complex questions to solve. Access to the FICO is limited to insurers and their associated entities, such as insurance brokerages. This implies that as a neighbor in a community, you cannot enter or request information. You won’t know firsthand if your building is listed in this file.

However, there are some signs that may lead you to that conclusion:

• If you have incidents that have led to significant outlay by the insurer in the last two years.
• The lack of an offer of renewal by the company upon the contract’s expiration.
• Difficulty finding a company willing to insure the community. To get confirmation, the best option is to go to an insurance brokerage specialized in communities of neighbors. The advisory manager will be able to consult the company about the reasons for denial, risk exclusion, or increase. They can also find out why the building is listed in the FICO. Remember that although it is not mandatory to have insurance for the community, it is highly recommended.

Of course, it’s necessary to try not to end up in this file. To this end, a series of preventive measures can be taken to help the community reduce its claims rate. Among them are the following:

• In case of an incident, it’s important to evaluate if it’s covered by the policy before reporting it. Keep in mind that filing a report is considered a cost by the company.
• Establishing responsibility is another key factor. It’s important to know whether it corresponds to the community or home insurance, as inappropriate notice can lead to an increase in the premium or deductible.
• The cost of the repair should be much higher than the deductible. There’s no point in filing a report if the bill barely exceeds the deductible, as it will cause unnecessary claims.

What to do if our community is in the FICO?

If your community is listed in this file, it will be more challenging to get insurance with good coverage. One of the most practical options is to resort to a specialized brokerage. We know the different insurers that are part of ICEA and offer you advice to minimize the impact of your building being listed in this database. Remember that at SECURME, the insurance brokerage for the home and community of Mediterráneo, we can help you with everything you need.

Insurers use the FICO file to minimize the risks of insuring a community of neighbors with high claims. Being listed in this database can mean exclusion or non-renewal of the policy and more difficulties in finding a new one. To minimize these inconveniences, it’s essential to be in good hands and follow correct practices when filing a report. For all this, nothing is better than having an insurance brokerage specialized in communities of neighbors.