Oregon Residents Saving on Insurance With Help from New Law

According to the Division of Insurance, Oregonians saved more than $800,000 in premiums last year with the help of a new law that allows them to request to be re-rated by insurers if they feel their credit score has improved.

Insurance companies around the country routinely take credit information into account when determining how much risk a prospective policyholder poses, which in turn helps determine how much to charge that policyholder for coverage.

Although some coverage providers will check a driver’s credit information first at the initial issuance of a policy and then again at every renewal, Oregon insurers have since 2003 been restricted to using credit information only for new policies. Policyholders, as a result of that restriction, could not benefit insurance-wise from an improvement in credit.Scissors cutting hundred-dollar bill

But a law passed in 2009 ensured that residents could see credit-based savings throughout the life of a policy.

Senate Bill 377 entitled policyholders to one annual reassessment of their credit-based rates. If their insurers used a credit score to help set premiums, then any improvement in credit information should lead to a premium discount.

Coverage providers are barred from raising rates as a result of these reassessments. They can only lead to more affordable car insurance prices or no change at all.

State officials recently surveyed 11 auto and home insurers and found that more than 8,000 of these discounts have been given since the beginning of 2010.

According to the state, the rate at which policyholders ended up with lower premiums varied widely.

“Typically, one-third to one-half of policyholders who requested a re-rating qualified for a lower premium,” the division said in a release.

The use of credit information by insurers has become a controversial topic in recent years. A number of consumer advocates and rights groups have said that low-income families tend to have negative credit history and end up bearing the brunt of the controversial practice.

But multiple studies — including an extensive report by the Federal Trade Commission — have shown that credit information is an effective predictor of an individual’s future claims trends, and the majority of states allow insurers to incorporate credit data into rate-calculation formulas.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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