You may be familiar that several folks in the executive branch of the Michigan state government are not fans of credit scoring for insurance. They sought to ban scoring, but had their efforts blocked in court. They’ve appealed, and according to this Insurance Journal article, arguments were recently heard by an appellate judge:
The appeals hearing follows the ruling by Judge James H. Fisher to strike down rules issued by the Michigan Commissioner Linda Watters that banned the use of insurance credit scoring in the rating and underwriting of automobile, home, and other personal lines of insurance. The court’s decision is expected to be made in the next few months.[...]
“Inflating the base rates of home and automobile insurance and using insurance credit scoring is unfair to consumers and illegal under the Michigan Insurance Code,” said Watters. “You can have a low credit score because you made your mortgage payment late, but that does not increase the likelihood that your house will be struck by lightning.”
A definitive court opinion called the OFIS’ rule “illegal and invalid.” OFIS appealed to the Michigan Court of Appeals.
The American Insurance Association (AIA) provided a different position on the Michigan ruling.
Although I’m not a lawyer, I suspect that the real legal issue is whether the Commissioner has the ability to ban scoring by fiat. In most states where scoring has been restricted for insurance purposes, the guidelines have come through state legislatures. And, if memory serves, the Michigan legislative branch declined to ban scoring a couple of years ago.
