A measure in Oregon that would have barred the use of credit scoring in determining insurance premium rates went down to a resounding defeat last week.
Measure 42–rejected by 65 percent of voters–would have barred all use of credit scoring by insurers in calculating premiums. Under current law, credit scoring is allowed only on initial applications, and prohibited for existing customers.
"Voters…understood that if Measure 42 passed, consumers would lose the lower rates most now enjoy because they manage personal finances responsibly," said Pat McCormick, a representative for Oregonians Against Insurance Rate Increases.
The industry spent around $4 million to defeat the measure, Kenton Brine, Northwest regional manager of the Property Casualty Insurers Association of America, said during a telephone news conference–although Consumers Union put the figure at $5 million. While spending was minimal by proponents, Consumers Union was a visible presence in strongly supporting the measure's adoption, he added.
If insurers learned anything, according to Mr. Brine, it was that they need not fear giving voters the facts about the subject. He said "this shows that voters understand, once it is explained to them, what a benefit it has been to the majority of consumers and how it ties directly to their level of personal responsibility…"
In a statement, Consumers Union and the Oregon State Public Interest Research Group urged the state legislature to create a level playing field, saying that one in four credit reports contain serious errors.
Norma Garcia, senior staff attorney with Consumers Union, said the industry created confusion in the minds of voters. "Credit scoring is unfair when it comes to insurance," she said. "Even consumers with good credit can pay more than they should because of this unfair practice."
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