Posted On: June 24, 2004, 11:42 am CDT

Posted By: Rolf Neuschaefer

The insurance industry is 'circling the wagons' and mounting an all out effort to supress any review of Credit Scoring. The louder they holler and the more they object, the more the regulators should examine the use of credit scoring in insurance underwriting and particularly personal lines.

It is a discriminatroy practice and is therefore in violation of all state insurance laws. The regulators should invite Fair-Isaacs to fully explain how they devised their credit scoring scheme and if they intended it to be used for underwriting personal auto insurance.

The regulators should then have the insurers and/or their trade associations explain how they have tweaked the Fair-Isaacs model and are applying it to personal lines underwriting.

The use of credit scoring is illegal in California yet the carriers do it. Allstate has been fined but the others keep doing it. The fact that the FTC under Fair Credit Act permit Credit Scoring in insurance underwriting is a reflection of the Republican majority in Congress but it does not make the use of Credit Scoring fair or relevant.

When insurers are allowed to spend millions generated from their policyholders to defeat efforts to protect consumers then something is seriously wrong with that picture.