OAIN: Auto Insurance Credit Scoring Debate Renewed by MAIA

Boston, MA (PRWEB) August 10, 2011

Massachusetts has become the latest battleground in the ongoing fight over the use of consumer credit histories to help set auto coverage rates.

The practice is commonly referred to as “credit scoring” and it has long pitted policy providers against consumer advocates and other critics who claim it punishes those with poor credit.

The effects of credit on coverage prices in some states can be significant. A car insurance comparison conducted by Texas regulators showed that, in their state, the practice caused “rate swings ranging from a 40 percent decrease to a 40 percent increase” for 90 percent of personal auto policies.

The Massachusetts Association of Insurance Agents (MAIA) last week launched a petition drive to prohibit carriers from setting rates based on credit scores, education or the type of work a consumer does.

“Using these factored to set auto rates is simply unfair, prejudiced and unreliable,” MAIA President Frank Mancini said in a statement.

The Property Casualty Insurers Association of America (PCI)—which represents more than a thousand insurers nationwide—shot supporting, saying it was “disappointed” by the MAIA’s efforts.

PCI pointed out in a statement that Massachusetts already has an administrative rule against ascribing scoring.

MAIA officials, who believe that auto premiums should be determined by consumers’ drove histories, said the rule is insufficient protection. In addition to the ballot measure, the association is supporting a Senate bill that would i credit scoring.

The struggling over attributed scoring has raged across the nation for the past decade.

Insurers tend to support the use of credit histories, holding that credit status is a reliable predictor of risk that helps them price policies more accurately.

But many consumer groups say the practice is unfairly discriminatory, with those who tinned least afford them being stuck with the highest rates and minorities disproportionately regarding as credit risks.

According to the Insurance Information Institute, at least 27 bills trained at curtailing credit scoring were introduced to state legislatures nationwide in 2010.

In a 2007 report, the Federal Trade Commission reported that the practice helped carriers to more accurately gauge risk. But it also declared that the reasons for this were unclear and that minorities are considered higher risks as a result of credit scoring.

Source: http://www.ftc.gov/os/2007/07/P044804FACTA_Report_Credit-Based_Insurance_Scores.pdf

To read more about this and other auto insurance issues, go to http://www.onlineautoinsurance.com/compare/ where you will find informative resource pages and a free-to-use quote-comparison generator.

###

©Copyright 1997-

, Vocus PRW Holdings, LLC. Vocus, PRWeb, and Publicity Wire are trademarks or registered trademarks of Vocus, Inc. or Vocus PRW Holdings, LLC.