Mass. Agents Association Pushes for Tougher Insurance-Score Ban

The Massachusetts Association of Insurance Agents (MAIA) is pushing for a 2012 ballot measure to bar insurers from considering consumers’ credit scores, occupations or educational backgrounds in setting private auto coverage rates.

The organization last week filed with the state attorney general’s office the 10 signatures required to start the petition process, despite the fact that a bill introduced earlier this year in the state Senate would likewise outlaw the practice of so-called “insurance scoring.”

MAIA officials contend that auto premiums should be based as much as possible on consumers’ driving records and years of experience behind the wheel.

“Two people living in the same neighborhood with identical driving records should not be charged different rates because one lost their job or fell behind on their medical bills,” MAIA President Frank Mancini said in a statement. “A person who decided to become a plumber or carpenter should not have to pay more for their auto insurance simply because they chose not to go to college or obtain a graduate degree.”

The association’s efforts appear to reopen an ongoing battle over the use of credit histories and similar factors in establishing costs.

Credit cardsInsurers have long supported the analysis of a person’s credit to help set rates, claiming statistics show that credit status is a reliable predictor of risk that allows coverage providers to set rates more accurately.

Consumer groups and other critics, meanwhile, contend the practice is unfairly discriminatory, with the highest rates being levied on individuals who are least able to pay them and with certain ethnic groups having restricted access to the most low cost auto insurance policies.

The Federal Trade Commission (FTC) has found that credit scores do correlate closely with the rate and size of claims filed, but it has been unable to definitively explain why that is.

Massachusetts already has in place a regulation that prohibits insurers from using credit scores in setting premiums, and the current insurance commissioner has made clear that he is against such practices.

But MAIA officials say that provides too little protection against “unfair, discriminatory and unreliable” rating practices.” Without formal legislation to prevent it, the state commissioner would be free to amend those rules following a public hearing, officials point out.

Spokesman Daniel Foley said the MAIA wanted to be able to put the issue to a public vote in the event the bill does not make it into law.

“We felt that we wanted to try to cover all the bases,” Foley said in a phone interview.

MAIA’s efforts drew criticism from the Property Casualty Insurers Association of America (PCI), among other groups.

“MAIA’s ballot petition effort is unnecessary,” Frank O’Brien, vice president of state government relations for PCI, said in a statement.

O’Brien said the ballot measure would “prohibit insurers from considering certain underwriting and rating factors they are already prohibited from considering.”

PCI has argued for using credit-based scoring, claiming that the practice allows insurers to offer lower rates to many customers.

About Gregor McGavin
Gregor McGavin is an award-winning journalist who has reported across the country for such publications as The Associated Press, the Arizona Republic, the Pittsburgh Tribune-Review and the Press-Enterprise.

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