As seen in Insurance Journal:
n 2003, the Legislature prohibited insurance companies from using the credit information of existing policyholders to decide whether to raise rates or drop a policy. Ballot Measure 42 would take the restrictions further.
If passed, it would ban insurance companies from using the credit history of new customers to set rates or premiums.[...]
“I heard this was going on…and I couldn’t believe it at first because it seemed so illogical,” said Bill Sizemore, an anti-tax activist and prolific filer of ballot measures, who launched Measure 42. “It’s a way to gouge the people least likely to fight back.”
He said current Oregon law discourages competition. Consumers may be protected from credit scoring at their current company, but would be subject to it at a new one. Additionally, he said credit information can be inaccurate, making it a weak tool.
Mmmm…gotta love the smell of flawed logic in the evening.
I’m not entirely sure how scoring proves to be anticompetitive. You’re a customer shopping for a new insurance carrier. If your credit report shows more responsibility/stability since you signed on, you’re likely to be able to find a better price (all other things being equal). If not, you aren’t obliged to move.
Furthermore, with the wide variety of scoring models in use, it is in the best interest of folks with “interesting” credit histories to shop around. Some insurers are likely to be more or less forgiving of certain items on the credit report. Vive la difference!
Also, one of the things that amazed me about scoring was that it worked so darned well even in the face of “dirty data”. Insurers have a vested interest in seeing the credit bureaus’ databases cleaned up because doing so would lead to an even more predictive tool.
(Banks, unfortunately have a conflict of interest. Better information leads to better models, but it also exposes them to having their best customers targeted by competitors’ marketing.)
I’ll point out that there is a group set up to campaign against Measure 42: No On Measure 42. (Creative name!) I’m a little disappointed, however, that they don’t discuss what happened to homeowners insurance rates when Maryland banned scoring for that product (2/3rds of consumers saw rate hikes, many of which were double-digit increases).