Wednesday, November 7, 2006
Consumer advocates vowed to fight on to protect Oregon consumers from the use of credit scoring for insurance following the defeat of Measure 42. The insurance industry spent $5 million against Measure 42 — far more than supporters of the proposal. Measure 42 would have barred insurers from using a customer’s credit score to set insurance premiums.
“Unfortunately, the insurance industry’s big money campaign against Measure 42 created a lot of confusion about what was at stake on election day,” said Norma Garcia, Senior Staff Attorney with Consumers Union. “But we remain determined to protect consumers from this unfair industry practice. Insurers should not be allowed to use credit scores to penalize good drivers and responsible homeowners with higher premiums.”
Consumers Union supported Measure 42 because credit scores are often based on inaccurate information and it is unfair and unnecessary to use them to price insurance. Studies show that the use of credit scores for insurance has a disproportionately negative impact on low income and minority families. Even consumers with good credit can be forced to pay higher premiums because of the peculiar way that insurance companies weigh credit data.
Beginning in 2004, Oregon law barred insurers from using credit scores to set premiums or cancel policies for existing customers. Measure 42 would have expanded this protection by prohibiting insurers from using credit scores or credit worthiness to set premiums for new customers.
“The insurance industry may have been able to use its financial muscle to defeat reform in Oregon, but this fight is not over,” said Garcia. “Oregon lawmakers should revisit this issue so that all consumers in the state enjoy the same rights. We believe that states throughout the country should move to ban the use of credit scoring for insurance.”
Norma Garcia, Consumers Union, 415-431-6747