On November 7 voters in Oregon will be the first in the U.S. to decide whether insurance companies will be prohibited from using such factors as credit history, debt and bill-paying habits in setting rates for homeowners and auto policies.  The insurance industry is spending millions of dollars on an ad campaign opposing the measure.  Although Oregon is the first state to put the issue on the ballot, Hawaii, California and Massachusetts have enacted similar bans.  In 2003, Oregon lawmakers barred the use of credit scores to set rates for consumers with existing insurance policies. Conning Research & Consulting reports that 92 percent of insurance companies use credit scores in setting auto rates. Supporters of using credit scoring in insurance say that people who manage their finances well are also more likely to act responsibly in other aspects of their lives, including driving safely. Opponents say that the use of credit scoring to make underwriting decisions discriminates against minorities and the less-affluent.

Credit Scores’ Link to Insurance Rates Tested (USA Today 10/30/06)

October 31, 2006