Indianapolis – The
Michigan law allows credit-based insurance scoring to be used only to provide discounts to customers for their home and auto insurance, not to determine if a person can be insured by the company, or if a surcharge can be applied, says Joe Thesing, NAMIC’s director of state affairs. Furthermore, Thesing notes all Michigan insurance carriers are required by law to submit their rates to the state, which has 60 days to reject them. None of those rates, which include discounts for credit scoring, have been rejected.
“NAMIC strongly supports the right of insurers to use credit information in making underwriting and rating decisions,” Thesing says. “Credit-based insurance scoring is a strong predictor of insurance loss that benefits policyholders directly through better rates and more choices in the marketplace. Prohibiting Michigan insurers from utilizing this valuable tool would undercut pricing accuracy and would result in less competitive auto and homeowners’ insurance markets.”
Neil Alldredge, NAMIC's VP for state and regulatory affairs says the legislation would harm consumers. “Rather than lowering insurance rates, this bill would interfere with the efficient functioning of the insurance market, leading to cross-subsidization and higher prices for insurance consumers with good credit histories,” he says.
Alldredge pointed to research that demonstrates that credit-based insurance scoring is an accurate predictor of future claims. “Study after study has unquestionably demonstrated the benefit of credit-based insurance scoring as a predictive tool for rating and underwriting,” he says.
Source: National Association of Mutual Insurance Companies
