Massachusetts Enacts Law on Credit Ban for Auto Insurance

[The Straight Story]

Massachusetts Enacts Law on Credit Ban for Auto Insurance

Massachusetts Governor Deval Patrick signed into law a bill that bans the use of credit in underwriting and rating private passenger motor vehicle insurance in his state.

The law, Chapter 195 of the Acts of 2011, was signed by the governor last week. The ban has already been in practice in the state but as an administrative regulation. This latest measure codifies into law the state’s current administrative ban on the use of credit scoring.

“We want to commend the legislature and the Patrick Administration for their leadership and support on this important issue,” commented Frank Mancini, President and CEO of Massachusetts Association of Insurance Agents. His group has been the driving force in the state to put into law the current ban on using credit information. (The use of other socioeconomic factors such as education and income levels will continue to be banned in the state but as administrative regulations, as they have been in the past.)

In October, Mancini and his association dropped their effort to put the issue on the statewide ballot initiative and had decided to focus solely on their legislative effort.

http://www.insurancejournal.com/news/east/2011/11/29/225451.htm

[haikugal]

1. This is a good law!!

[EC]

2. About time someone did this.

When I was in insurance and the underwriters told us they were going to do this because people with higher scores turned in less claims. I went through all my accounts and showed them it was the opposite. The higher the score, the more they made claims and the lower their deductible, meaning we paid out more to them. Most of them, when they would call to make a claim, felt entitled and I think this is part of why the rich stay richer. They filed claims for EVERYTHING AND ANYTHING they felt they could get away with. One even put in a claim for a stain on their driveway. And guess what...because of their high credit scores their premiums didn't even go up at renewal time.

[Marrah_G]

3. GOOD- credit rating should not be for anything but extending credit

[SoCalDem]

4. Amen!

Insurance companies have the unique position of being able to end coverage the instant an account becomes delinquent. They don't need a credit check. They only cover against loss/accident...and the coverage is only there when the account in paid on time.

[kenny blankenship]

5. Good. More must be done to stop the use of data to create a caste-bound society

Also worrisome are the proposals for "trusted citizen" security classification which would no doubt be partly derived from credit bureau data with a healthy measure of racial profiling on top. They always say "it would only be for purposes of clearing people for air travel!" but the misuse of credit data for purposes to discriminate against and gouge people in unrelated arenas like auto insurance shows how believable these excuses are. In no time, your trusted traveler national security rating would join your credit rating in determining whether an employer would consider you for a job and any other situation where a powerful entity would like to put you at a bargaining disadvantage while for attracting, with more advantageous terms, those it considers more desirable, for purposes of its brand image.