The Michigan Office of Financial and Insurance Services (OFIS) released the dates of upcoming hearings on the use of credit scoring by insurers. In May, Commissioner Frank M. Fitzgerald announced public hearings to gather information on the use of consumer credit history to set insurance rates and the effect of this practice on consumers in Michigan. Public hearings have already been held in Cadillac, Portage, and Port Huron.
Upcoming public hearings are as follows:
Thursday, July 11 – Grand Rapids 5:30 p.m. City Hall, 300 Monroe, N.W., City Commission Chambers, 9th Floor and Thursday, July 18—Detroit 4:30 p.m. Wayne County Community College, Downtown Campus, 1001 West Fort Street, Room 123.
“Insurance companies legally can, and do, use credit history to establish insurance rates in Michigan,” Fitzgerald said. “This practice is considered a discount for homeowners and automobile insurance, just like discounts for seat belts or fire alarms. Because the link between credit history and the likelihood of a consumer filing a claim is not clear, the increasingly common practice of using credit to set insurance rates has raised many questions.”
In Michigan, insurance companies offering automobile and/or homeowners insurance cannot refuse to write a policy, cancel a policy, or not renew a policy based on a person’s credit history, sometimes referred to as a credit score. Credit scores are calculated from formulas based on factors in a person’s credit history. The formulas and scores are established by credit scoring companies such as Fair Isaac or ChoicePoint.
Subjects and issues that are expected to be addressed at the public hearings include: formulas used in credit scoring; whether credit scores can accurately predict the likelihood of filing an insurance claim; the range of credit history rate discounts being used; consumer awareness of the use of credit scores for setting insurance rates; how the use of credit scores for insurance rates is explained to consumers; and the role of insurance agents.