Score Wars

Consumers Caught in the Crossfire
The Case for Banning the Use of Credit Information in Insurance

This report examines the use of credit information in the underwriting and pricing of insurance
and its negative impact on consumers. The impact of credit data on insurance decisions such as
coverage and premiums varies from insurer to insurer and from state to state, depending upon
insurer practices and varying laws and regulations. Nonetheless, the common thread is the use
of consumer data that is credit-based and how this impacts consumers in any state that permits
this use. This report discusses why using credit information is both unfair to consumers and
unnecessary, examines trends in state laws over the last four years, discusses the flaws in the
model law touted by the industry, offers a model state law to protect consumers, and provides
additional suggestions for protecting consumers from the unfair use of credit information in
insurance decisions.

Credit scores, based upon information contained in an individual’s consumer report (also
commonly referred to as a “credit report”), were developed for use by lenders to predict how
likely it is that a prospective borrower will default on a loan. This technology has allowed
lenders to speed up the process of granting credit by using a credit score as an indicator of a
borrower’s creditworthiness, though there are still significant fairness issues for consumers with
credit scores. Today, most consumers understand that creditors consider credit histories when
deciding whether to grant credit to the consumer and on what terms.

To read more of the report, Score Wars, click here.(PDF format only)