Oregon votes down insurance credit score bill

Oregon voters rejected a bill last night to prohibit the use of credit scores in determining insurance rates for new customers. Measure 42 was defeated in a nearly 2-1 margin by voters. Heavily funded campaigns against the measure stressed the fact that ending the use of credit scores would result in higher premiums on homeowners, auto and commercial insurance rates. From InsuranceJournal.com:

"We are very pleased that Oregon voters understood the harm Measure 42 would have caused – higher insurance rates for 60 to 70 percent of Oregonians. This vote represents the public's continuing support for insurance pricing that reflects risk. Voters understood that Oregon already has one of the strongest consumer protection laws in the country and this initiative would have unnecessarily increased rates," said Kenton Brine, northwest regional manager, Property Casualty Insurers Association of America (PCI).

The insurance industry is justifiably excited about this measure failing to pass. Insurance groups spent almost $4 million combating this bill and fighting to keep credit scores as part of their reviews. Oregon was the first state to vote on a bill prohibiting credit score use for new customer underwriting and would have set a dangerous precedent for the industry had it passed. In 2003, the state voted to approve a bill that prohibited the use of credit scores for evaluating existing insurance customers.

The use of credit data in insurance calculations has been extremely controversial since its inception. Proponents cite the fact that insurance credit scores can accurately predict customer risk behavior and have led to reduced insurance costs for consumers with healthy credit. Opponents argue that credit scores and financial data has nothing to do with the way that a consumer drives and is harmful to low income and minority consumers.

What do you think about the use of credit scores to underwrite insurance? Did Oregon do the right thing in voting down Measure 42?

Comments

[Mark]

As in most cases, insurance companies are only concerned with their well being, and not that of their customers. Perhaps areas where people live, and driving records should determine insurance costs. Insurance ompanies are only interested in one's ability to PAY, and their ability to deny insurance coverage after claims are filed. Hmmm sounds awfully SELFISH, excuse me, I mean REPULICAN to me.