As seen at Insurance Journal:
Delaware Insurance Commissioner Matt Denn has taken arguments against insurance industry use of credit scoring to the U.S. Supreme Court, filing a brief in a pending case involving the practice.
Denn recruited 12 other state insurance commissioners to join Delaware in filing the brief.[...]
Denn and the 12 other insurance commissioners told the Supreme Court that they were filing their brief to “further their collective mission of protecting consumers by supporting interpretations of the FCRA that (a) put valuable information in the hands of consumers, (b) provide appropriate incentives for insurance companies that use consumer credit information to adopt procedures that assure compliance with the law, and (c) hold insurance companies accountable when they adopt policies that recklessly disregard consumer rights in contravention of the FCRA.”
The 13 states involved are Arkansas, California, Delaware, Georgia, Iowa, Kansas, Michigan, Montana, New Mexico, North Dakota, Oklahoma, Utah and Washington.
The case is one where Safeco and GEICO have been found guilty in lower courts of failing to make the appropriate disclosures required under the FCRA in conjunction with their use of scoring.
While I am pro-credit scoring when it comes to insurance rating and underwriting, I’m also pro-consumer when it comes to the disclosure requirements associated with scoring.
I think that insurers and consumers ought to be on a level playing field for fairness’ sake when it comes to the information considered when underwriting or pricing personal insurance. While disclosure practices can be messy to implement (both technically and from a customer-relations standpoint), fairness dictates that an insurer advise a consumer what’s going into the decision being made. The consumer needs to be empowered to correct any errors in the information being used.
While things have improved dramatically since the days when I started working intimately with insurance credit scoring, this case has thankfully gotten some of the folks in the “we have to keep this a secret” camp on implementing scoring to move into the sunshine.
