Insurance
Credit score court ruling chips away at unfair insurance practices For years I have been fighting to bring much needed relief to Michigan citizens paying exorbitant auto and homeowner insurance rates. Thankfully, the Michigan Court of Appeals has weighed in on my side with their recent ruling that insurance companies can be prohibited from using credit scoring to determine insurance rates. This is not the end of my battle, but it is a step in the right direction. This is a significant victory for insurance customers across Michigan, and especially for Detroit residents who pay some of the highest auto and homeowner rates in the state. Using credit scoring as a factor to decide insurance rates is blatantly unfair. A person’s credit score is an unreliable and arbitrary score that does not reflect their driving record or their insurance payment history. Insurance rates should be determined by steps taken to reduce losses. Under those criteria, credit scoring has absolutely no bearing on your use of seat belts, the presence of air bags, car anti-theft devices, door and window locks on your home, and home alarm systems. Using credit scoring to determine rates is just another way to make money for insurance industry executives at the expense of hard-working yet cash-strapped Michigan citizens. Four years ago we were on the right track when Michigan’s Insurance Commissioner ruled against the use of credit scoring. The insurance companies challenged that ruling in Circuit Court and won. That ruling was then challenged in the Court of Appeals, which ruled in favor of insurance customers. If the insurance companies want to continue this fight, then they will have to take this case to the Michigan Supreme Court. Michigan residents deserve this Court of Appeals win. They are not seeking a hand-out. They are not arguing that they shouldn’t have to buy car insurance. They are simply seeking affordable rates for a product they are required by law to have. The current high rates unfortunately turn some law-abiding people into criminals when they drive without insurance because they simply can’t afford it. I don’t believe that this was the Legislature’s intent when they passed Michigan’s No-Fault Insurance law. While we have made progress with this court opinion, there is still much more to do. I have a package of bills that would address many of the current problems with auto and home-owners insurance waiting for action in the Senate Committee on Economic Development and Regulatory Reform. Sadly, the committee’s Senate chairman refuses to move my bills. They continue to languish despite my daily appeals during Senate session, and the pleas for relief that I continue to hear from Michigan citizens. We have won an important battle, but the war still rages. These high insurance rates are an injustice, and I will not rest until I see significant changes in how rates are calculated so that every driver and homeowner can benefit from fair and affordable premiums.
September 12, 2008 by Senator Martha G Scott
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