One States Effort to Control Insurance Credit Scoringby Anna Glendenning | More from this Blogger 21 Sep 2006 02:29 PM Insurance companies have been using Insurance Credit Scores for several years now. This information has been used in a variety of ways to underwrite and rate insurance products offered to the public. As a result consumer groups and states have expressed concern as to how Insurance Credit Scores are being used and what protections consumers should expect. A number of states have passed a variety of laws and restrictions on Insurance companies and how they use the Insurance Credit Score information. It would be impossible for me to keep track of the changes in every state but, this is some of the things Oregon is doing. In July 2005 the Oregon governor signed the Insurance-Based Credit Scoring, SB 573, which took effect on Jan. 1, 2006. In general, SB 573 set specific criteria for how and when consumer credit information can be used for underwriting purposes. SB 573, states that insurance companies that issues personal insurance policies, "May not re-rate existing policies or re-rate a customer based on a customer's credit history or the credit history component of a customer's insurance score when the marital status of the customer changes due to death or divorce." Oregon has other laws limiting the use of credit information some of the current statutory restrictions are:
In Oregon insurance companies May Not use following types of credit history information to decline coverage of personal insurance, calculate an insurance score or determine personal insurance premiums or rates based on the lack of credit history, or an inability to determine a consumer's credit history, if the insurance company was given accurate and complete information from the consumer, unless the insurer does one of the following:
Oregon also will not allow Insurance companies to consider the impact on a consumer's credit score based on certain credit inquiries. Credit Inquires often can affect a consumers overall credit score so the following types of credit inquiries are not permitted to be used to lower an Insurance credit score:
Currently Oregon voters are being bombarded with the political advertising over the pending Measure 42 written by Bill Sizemore. On Mr. Sizemore's website he issues the following statement: Measure 42, which I wrote, would prohibit the obscene practice of using credit scoring to establish consumer insurance rates or premiums. In case you weren't aware of it, insurance companies across the country routinely check your credit before issuing you a policy and base their rates largely on the credit scoring models they have created. Consumers beware: The entire system is a scam. MORE.... As a former Oregon Insurance Agent I have my own opinion about Insurance Credit Scoring. It is impossible for me to write this Blog without adding my own editorial on the subject. Since I can no longer vote in Oregon following my move out of state: A Former Oregonian and Retired Oregon Insurance Agents Opinion: My hope is that each citizen in the state of Oregon understands that in my own experience insurance scores are not used to rise the rates of consumers who have poor credit histories, rather insurance credit scores are more commonly used to offer those with better credit scores discounts. Should measure 42 pass these discounts will end and the rates of people with lower credit scores will NOT be reduced instead the premium rates of those people being offered discounts will be raised.
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Evan www.Leads4Insurance.com  Anna Glendenning (4234) 22 Sep 2006 01:18 PMThanks Evan... It is nice to be retired and speak my peace of mind! I too feel that there are some benefits with Insurance Credit Scoring and find nothing wrong with the current laws and protections the state of Oregon has in place. I am not sure why the public accepts credit scoring for Employment and finds it upsetting for insurance? Superagent13 (15) 27 Sep 2006 09:23 PMAnna, it's ironic how the major insurance carriers across the country say "We can't make a profit without the use of insurance credit scoring". Well, how were they able to stay in business prior to the electronic age? In the great scheme of things, credit scoring in general is relatively new. A major abuse is the fact that some insurance companies feel the need to "re-rate" the insured every few years based on their credit score, and raising rates accordingly. Imagine an insured being with the same homeowners insurance company for five years, with no claims. On the renewal for the six year, there is a rate increase due to change in the credit score.... Isn't the fact that the insured has had a "claim free" record for the previous five years as a policyholder a greater indication of claims frequency than the "insurance credit score". David www.usinsurancezone.com Evan (130) 28 Sep 2006 08:18 PMI agree with you completely Anna, it seems to just be one of those situations where people haven't really analyzed the issue. Instead, they see the word insurance and scream "NO!" Evan www.Leads4Insurance.com Anna Glendenning (4234) 17 Oct 2006 02:56 PMSuperagent13 , Insurance companies have always reviewed the underwriting of their policy holders and made changes according to several things. I once insured two people who lived 2-blocks apart, and were the same age, had clean driving records and drove cars of about the same value.... Yet the cost of the auto liability for each policy holder was VERY different. When I investigated I found that within the 2-blocks the ZiP-Code changed and the poor insured with the HIGHER Premiums lived on the Wrong Side of the tracks.... Even though when you drove through the area there was No Apparent change from one neighborhood to the other.... Insurance companies use Things we ordinary people would not even consider as a part of rating insurance. Prior to Credit Scoring we were all just charged a higher rate to make up for the increased claims of people with no means to cover any tiny part of any little loss... Not to mention the Fraud that takes place because some people see an easy way out of their financial problems and have some kind of strange loss... In 1983 I was denied a Renters Insurance Policy when I lived in California based on my (BAD at the time) Credit History. It made sense to me. California had seen a skyrocket in the number of "Questionable" Renters Insurance Claims and when the Company I was with investigated they found a HUGE percentage of the questionable claims were renters who had bad credit. To me, even having had a history of horrible credit, I tend to agree with the Insurance companies on Credit Scoring. Now that I have WORKED myself half to death redeeming my own credit and saving, paying and getting by while I got my credit cleaned up--I WANT the DISCOUNTS my Insurance Company gives to people with Good Credit! It is Just One more Incentive for me to pay my bills and not over extend myself.... stevenjames1308 (5) 30 Oct 2006 12:42 AMEven I agree with you completely Anna. People just tend to run away from the word 'Insurance' without realizing its benefits. They are completely ignorant of organizations like HMO which offers financial support and medical treatment to plan members. What one needs to realize out here is that there are many options available in the Insurance market which should be made use of. Anna Glendenning (4234) 08 Nov 2006 03:47 PMWell, considering all the results of yesterday's election and votes--I am very Happy to see that OREGON voted this one Down! So, if you are in Oregon Your GOOD Credit History will continue to save you money! Community Tags homeowner's insurance, Insurance Credit Scores, Insurance Credit Score, Measure 42, Oregon Discuss this article
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