WATTERS TOUTS SCORING BAN TO MICH. SENATE:

Michigan Commissioner Linda Watters told the Senate Banking and Financial Institutions Committee that policyholders could see lower premiums if the state stops companies from using credit-based insurance scoring. She said that good credit discounts are unfair to the poor and those with bad credit. Gov. Jennifer Granholm has proposed a rule that would prohibit insurers from using credit history to determine a customer’s premium. The rule will go into effect in January 2005 unless the House and Senate reject the bill. Republicans and auto and home insurance companies argued that credit scoring is useful in predicting whether or not an insured will file a claim. They also said that two-thirds of Michigan customers currently receive a good credit discount. Democrats argued that poor customers and those with bad credit are subsidizing customers with better credit. Commissioner Watters conceded that, if the proposed rule is put into effect, customers receiving the discount would see their premium rates rise. Some lawmakers are concerned that a ban on insurance scoring would drive insurance companies to move, leaving a limited number of companies in the marketplace and higher premiums for customers. Watters said that credit scoring especially hurts those that are going through medical or economic catastrophes.