Michigan Favors Credit Scoring on Auto Insurance Quotes

The Insurance Institute of Michigan and a number of leading auto insurance carriers will be breathing a sigh of relief after the recent decision by the Supreme Court to allow credit scoring as a means of determining auto insurance rates. The case originally came to court after objections from the Office of Financial and Insurance Regulations, who claimed that credit scoring would lead to financial hardship for certain social groups and the numbers of uninsured or underinsured motorists on the road would continue to increase.

The Office of Financial and Insurance Regulations have vowed to continue fighting the decision of the Supreme Court for the following reasons:

  • The decision to allow credit scoring to determine auto insurance rates would prove to be harsh on Detroit residents living in impoverished areas
  • Credit scoring would allow carriers to charge excessively high auto insurance rates without any regulation on limits
  • Many road users would simply ignore the mandatory auto insurance requirements and continue to use their vehicles without sufficient coverage in place
  • Credit scoring has no direct connection with the driving abilities of individual motorists

The case itself dates back almost six years after objections to credit scoring from local government officials. The Michigan State Lower Court ruled in favor of the practice in 2008 but the decision was subsequently overruled after appeal. The Supreme Court eventually decided that credit scoring had not been proven as a form of unfair practice. Michigan currently suffers from some of the highest auto insurance rates in the country and motorists may find that the latest decision will prove to be even more expensive.