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Should using credit scores to set auto insurance rates be banned?

Posted by Mitch Lipka  September 6, 2011 02:38 PM

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The Massachusetts Association of Insurance Agents, which wants the state legislature to ban the use of credit scores in the setting of auto insurance rates, is now aiming to let voters have their say next year if their lobbying doesn't succeed. The group has taken the initial steps to get a petition on the 2012 ballot.

Consumer advocates have long decried the practice of tying someone's credit score to their insurance rates. The association also released a survey that showed more than 63 percent of Massachusetts voters would be inclined to vote to support a law banning the practice and more than 80 percent said they didn't think credit scores should factor into an auto insurance rate.

Insurance industry officials have defended the practice by saying a credit score is an indicator of an applicant's propensity to file claims. The poll also showed that 68 percent of those responding thought an applicant's driving record should be used to determine the likelihood of filing a claim.

While this issue applies in most states, Massachusetts is already among a small handful of states that officially frowns on the practice of using credit scores for auto insurance rate setting and prohibits anyone from being denied insurance based on their credit. But the rules are administrative, the association says, and should be the law rather than at the discretion of a state official.

“Using these factors to set auto rates is simply unfair, discriminatory, and unreliable,” association President Frank Mancini said in a written statement. “Two people living in the same neighborhood with identical driving records should not be charged different rates because one lost their job or fell behind on their medical bills."


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About the author

Mitch Lipka is one of America's leading consumer journalists and advocates. He is an expert in product safety, recalls, scams, and helping consumers get out of jams. He is a nationally known consumer columnist and runs TheConsumerChronicle.com. He lives in Worcester. You can find him on Facebook or reach him at ConsumerNews@Aol.com

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