Credit Scoring Foes Won't Give Up
By Steve Tuckey
NU Online News Service, April 27, 4:14 p.m. EDT?Foes of insurers' use of credit records to rate customers are not yet ready to throw in the towel despite insurance groups' recent successes winning credit scoring battles in legislatures and court.[@@]
"I have no doubt about it. It will eventually be banned," said Robert Hunter, insurance director of the Consumer Federation of America.
In a Michigan trial court last week, insurers won the first round in efforts to overturn Commissioner Linda Watters' efforts to ban the practice.
"Well, let's just see what happens when they take it on the appeal process," Mr. Hunter said.
Ms. Watters immediately announced plans to appeal the ruling.
In Washington, four bills that would have either banned or severely restricted the practice died in committee. "That action should send a message that the regulatory environment has begun to stabilize," said Christian Rataj, state affairs manager for the National Association of Mutual Insurance Companies.
But some fights remain.
In Florida, the insurance industry has gone to court to overturn a regulation that in the words of the Property Casualty Insurers Association of America's (PCI) personal lines director Lynn Knauf, "severely restricted the industry in its use of the practice." The state had previously enacted an industry-favored law that closely tracked a National Conference of Insurance Legislators' model.
Laws banning the practice are in the hopper in legislatures in Delaware, California and Texas. The practice is currently banned in California by a directive of the commissioner.
"The Michigan decision was significant. In fact, I am pretty surprised the commissioner is appealing since the ruling was pretty emphatic," said Ms. Knauf. "But there are still plenty of fights out there."
Mr. Hunter said that while the insurance industry has plenty of power to gain the initial victories, pretty soon lawmakers will realize that you cannot permit one practice such as credit scoring that serves as a surrogate for another practice such as racial bias to be permitted to operate.
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