The use of credit information for underwriting and rating has been a staple of the risk-based pricing system for nearly 30 years. (ALM Media Archives)

There remains confusion and misinformation surrounding how and why insurance companies use credit-based insurance scores as well as several other factors such as education and occupation as predictors of future losses.

Over the decades, the use of credit information has been a perennial legislative issue. This year, the Property Casualty Insurers Association of America (PCI) tracked bills in 16 states. Legislation was defeated in 13 states that would have taken a very restrictive approach or that would have banned the use of credit and such other factors as education and occupation. As of June 29, in Michigan, legislation that would ban insurance scores was still pending.

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