LANSING – After so many years of fighting to end what he called the unfair practice of basing insurance rates on credit scores, it’s about time the Supreme Court give the state the power to stop the practice that results in higher rates for many Michigan residents, said state Insurance Advocate Butch Hollowell on Wednesday at a press conference in front of the Hall of Justice.
But Tom Shields, president of Marketing Resource Group, said during the conference, which was held while the court heard arguments on case that 70 percent of consumers benefit from the practice of discounting for good credit.
He said there is actuarial proof that people with worse credit scores cost more to insurers, but said he’s not sure why those figures haven’t been made more public.
But Mr. Hollowell, joined by Sen. Martha Scott (D-Detroit) and Michigan AFL-CIO President Mark Gaffney, said that a person’s credit has nothing to do with driving ability.
“The insurance industry’s use of a person’s occupation, education, and record of paying household bills is arbitrary, unfair, and should be prohibited in Michigan,” he said in a statement released on Wednesday. “These factors have nothing to do with how consumers drive. How can companies justify charging consumer 50 percent more for their auto insurance if they don’t have a college degree? They can’t.”
Gaffney said that with sustained unemployment an average of seven months long, people are likely damaging their credit by skipping some payments to make ends meet, meaning they could see increases in the cost of insurance on top of unemployment “adding economic insult to injury.”
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