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CT bill would cut auto insurers' reliance on credit scoresAccording to a report in the Hartford Courant, a bill supported by state attorney general Richard Blumenthal and headed for consideration by Connecticut's House of Representatives would limit how auto insurers could use credit histories when evaluating applicants. In the insurance industry, it is generally accepted practice to use credit scores as one factor in determining premiums. Therefore, individuals with a poor credit history would likely be subject to higher insurance rates. The new bill under consideration in Connecticut would prevent auto insurers from taking into account the credit history of an individual negatively affected by a life circumstance - such as identity theft, loss of employment for over three months or death of a spouse - within three years of applying for insurance, says the article. The Courant also reports that the bill would force insurers to be transparent about how credit scores are being used during their review of applicants. Consumer advocates applaud the effort to protect individuals - especially as job losses mount and credit card debt piles up. Auto insurers and consumers in Michigan are waging a similar battle. Earlier this month the state's Office of Financial and Insurance Regulation called into question the use of credit scores in determining insurance premiums. Insurance companies there argued that using credit scores as a method of evaluation has been tested, and without it some drivers hoping for a discount based on good financial records may in turn see a rate hike. Legislators and insurance companies in Florida engaged in heated discussion over the same topic last month. The state has previously tried to remove credit scores as a factor in assigning auto insurance rates, but failed.
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