Agents in Massachusetts seek ban on insurers’ use of credit scores


Agents in Massachusetts seek ban on insurers' use of credit scoresThe independent insurance agents in Massachusetts are opposing the use of credit scores, education level, and occupation, in the auto insurance pricing by the auto insurance companies they represent. They have been pushing to get a ban on such pricing, on the 2010 ballot by the state.

The MAIA or Massachusetts Association of Insurance Agents have stated that they have put forward their petition with the Attorney General’s Office after obtaining 10 signatures that are required to start the process of putting forward the petition on the 2012 ballot, to prevent insurance companies from using such information such as an individual’s credit scores, level of education, or occupation, while underwriting the policies.

The opposition by the group against using these factors while pricing the policies goes against some of the auto insurance companies whose policies they sell.

However, a trade group for auto insurers in the state has said that the independent insurance agents were unhappy that the state has a competitive market at present. They also feel that if the ban is passed then it would put an end to a number of premium discounts that motorists enjoy at present.

The MAIA’s petition reflects the legislation that the group filed during this session – the Senate Bill No. 461, which would prevent the use of socioeconomic factors.

Frank Mancini, the president of MAIA has stated that while they have maintained their focus on the passing of this crucial bill through the Legislature, they also felt that it was essential to keep their options open.

MAIA has argued that the auto insurance premiums should ideally be based on other factors such as an individual’s driving record or years of driving experience etc. Presently, Massachusetts only has administrative regulations that prevent the use of an individual’s socioeconomic background while underwriting policies.

Mancini & group believe that without a formal legislation in place, the insurance commissioner has the discretionary powers to change the rules at any point in time after conducting a formal public hearing.

The present Insurance Commissioner, Joseph Murphy has however, already indicated that he has no plans to amend any of these regulatory prohibitions that are already in place. However, the agents do not want to take a chance by leaving it to the discretionary powers of any regulator.

Mancini also stated that using these factors to underwrite policies was an unfair practice because it was unreliable and discriminatory in nature.