Oregon Election: Blocking Credit Scoring Initiative a Top Priority

November 7, 2006

Defeating an Oregon ballot measure that would ban using credit scoring to set insurance rates has become a top priority for the Property Casualty Insurers Association of America (PCI) and other insurance industry representatives. Measure 42 asks voters whether the state should ban insurers’ use of credit scores in whole or in part for purposes of rating insured or applicants.

“Persuading voters to reject the measure is crucial to dissuade activists in other states from similar attempts,” PCI said in a statement.

The ballot measure was introduced by frequent ballot measure activist Bill Sizemore. In 2003, the Oregon Legislature prohibited insurance companies from using the credit information of existing policyholders to decide whether to raise rates or drop a policy. Ballot Measure 42 would take the restrictions further. If passed, it would ban insurance companies from using the credit history of new customers to set rates or premiums.

According to PCI, if approved, Measure 42 would be costly for consumers. “Today, 60 to 70 percent of Oregonians pay lower insurance premiums because companies use credit scores to help calculate their rates,” the association said. “If Sizemore’s measure passes, Oregonians with good credit history would subsidize individuals with bad credit. Consumers may be forced to pay significantly more for their auto or homeowners insurance.”

However, the measure has picked up support from the nation’s largest consumer-protection advocacy group.Norma Garcia, senior attorney for the Consumers Union, which is behind Consumer Reports magazine, called Measure 42 “the first ballot initiative of its kind anywhere in the nation” and said it “will go a long way to protect insurance consumers in Oregon.”

Garcia said her organization sees the measure as a needed consumer protection against the use of individuals’ and businesses’ credit worthiness in determining how much they should pay for insurance, or if they are too risky to insure.

On the other hand, Oregonians Against Insurance Rate Increases argues that the measure’s passage would result in higher rates paid by most Oregonians. It contends that Oregonians with good credit would subsidize the rates of those with bad credit. PCI is a founding member of Oregonians Against Insurance Rate Increases.

Whatever the outcome after today’s election, other states will be watching the outcome of the election because if it passes, it would affect both personal and commercial lines, according to Nicole Mahrt, a representative with the American Insurance Association in Sacramento. If Measure 42 passes, it could be replicated in other areas of the country, she indicated.

The Associated Press and statements from PCI contributed to this article. Additional reporting by Patricia-Anne Tom.

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