Seen in a wire service story:
The Massachusetts insurance commissioner on Friday banned the use of drivers’ credit scores in auto insurance coverage decisions under a final set of rules opening the state’s auto insurance market to greater competition.
Commissioner Nonnie Burnes expanded restrictions on insurers’ use of credit histories after consumer advocates, the state’s attorney general and some insurers said at a Sept. 20 public hearing that Burnes’ draft regulations weren’t strong enough.
Burnes’ Aug. 28 draft proposal forbid insurers from using data from credit reports in setting individuals’ rates during a one-year transition to a new market starting next April. But her earlier proposal would not have barred insurers from considering a driver’s credit history in underwriting, or deciding whether to insure someone.
Considering the political climate in Massachusetts, this isn’t too surprising…and I have to admit that permitting scoring for underwriting but not rating is the exact opposite of the compromise struck in most other states, where rating based on credit is OK, but refusing to write due to credit is not.
From my perspective as a “credit lover”… I still don’t think this is a bad thing. To the extent that insurers are being permitted to determine their own rates, not having access to credit is fine given that access is being blocked to all competitors. Also, given that one of the concerns in Massachusetts is of massive rate swings as deregulation is phased in…perhaps having one less variable at work is not a bad thing.