Judge Blocks Michigan’s Challenge to Insurers’ Use of Credit Scores

Barry County Circuit Judge James Fisher issued an injunction April 10 preventing Michigan insurance regulators from challenging insurers’ home and auto insurance rate filings that use credit scoring in determining their premiums.

The injunction against the Office of Financial and Insurance Regulation (OFIR) was hailed by insurers. Michigan Insurance Commissioner Ken Ross vowed to appeal.

In 2005, OFIR promulgated administrative rules banning the use of credit scoring. The insurance industry challenged the rules and OFIR has been prohibited from enforcing them while the issue worked its way through the legal system. Both parties have pending applications for leave to appeal in the Michigan Supreme Court.

Ross has refused to consider any filings with credit scores even though there has yet to be a final court ruling. He said he was not enforcing a broad prohibition against credit scoring as the court enjoined him from doing but was instead ruling on case-by-case review of the base rates proposed by insurers.

“Michigan consumers lost big today – but the fight isn’t over yet,” Ross said.

The new Fisher decision expands the 2005 injunction by preventing Ross and OFIR from challenging insurance credit scoring by enforcing the insurance code on a case-by-case basis as Ross said he would do last month on auto insurance filings.

Ross also has attempted to expand his credit score challenge to home insurance filings on a case-by-case basis.

The Insurance Institute of Michigan, Michigan Insurance Coalition and several member insurance companies filed the legal action, contending that Ross’s recent actions to deny any home and automobile rate filings that utilize credit-based insurance scores violated the terms of the order issued by Fisher in 2005.

Topics Carriers Legislation Michigan