News

FOR IMMEDIATE RELEASE

Tuesday, April 26, 2005 Contact: Dan Farough

LANSING - State Representatives Tupac Hunter (D-Detroit), Gabe Leland (D-Detroit), LaMar Lemmons Jr. (D-Detroit) and LaMar Lemmons III (D-Detroit) denounced a Barry County judge's decision to allow insurance companies to use credit scoring, calling it a step backward in protecting Michigan consumers from unfair practices in determining rates.

"Credit scoring is notoriously inaccurate and it should not be used to determine insurance rates," said Rep. Hunter. "Insurance companies should use fair and objective criteria like driving records to determine rates, not zip codes or credit scores."

The state Office of Financial and Insurance Services planned to implement the new rules on July 1 that would prohibit insurance companies from using an individual's credit history to set rates. However the Insurance Institute of Michigan filed a lawsuit to block the new rules that would prohibit insurance companies from using an individual's credit history to set rates.

Recently Judge James H. Fisher ruled that state Insurance Commissioner Linda Watters overstepped her authority when she filed the new rules, which would also require companies that used insurance credit scoring to reduce their base rates by the difference between the premium they collected in 2004 and what they would have collected without the credit score discounts.

Watters said she plans to appeal Judge Fisher's decision.

"I am disappointed that Judge Fisher chose to enjoin the insurance credit scoring rule," Watters said. "I will appeal this decision to the Michigan Court of Appeals, which I hope will recognize the legality and necessity of reducing base rates and eliminating insurance credit scoring."

Rep. Lemmons III said he supports Watters' decision to appeal.
"A responsible driver could have a bad credit history for many reasons, sometimes beyond their control," Rep. Lemmons said. "Some people have experienced an unexpected layoff, death of a spouse or severe unemployment, which has absolutely no bearing on their ability to drive a car. Some consumers' rates go up just because someone asks about their Credit rating. Credit scoring is unfair. It penalizes people for the wrong factors and it's discriminatory."