Welcome to

Florida Insurance regulators got into a sparring match with the industry
today over whether it is proper to use credit scores to set auto
insurance rates. As Mike Vasilinda tells us, the contentious hearing
could result in the scores being outlawed for rate setting purposes.

Hear it Here: Credit Scores Affect Car Insurance Rates

How much you pay for car insurance depends more on your credit score than
your driving record.

Testifying under oath, insurance executives sparred with regulators over
the accuracy of using credit scores to set auto insurance rates. They
contend credit scores more accurately predict losses than driving
records. What they couldn’t explain was why.

“What you think is a weakness, and not knowing why there is a correlation, is not a knowable thing,” Michael Miller with the Florida Insurance Council said.  It’s not knowable for any risk factor.”

Two bills have been filed in the legislature to stop the use of credit scores in setting auto insurance rates.

Sponsor Ronda Storms says it just isn’t fair.

“The credit scoring has no impact on their driving skills, on their ticketing,” Storms said.

Hundreds of companies advertise ways to improve your credit score.
Economist Birny Birnbaum says the some time inaccurate scores do not
reflect risk.

“Would you call someone financially irresponsible, if their spouse was in the hospital with cancer and they decided that instead of paying the credit card bills, they were going to pay the hospital?” Birnbaum said.

The insurance industry countered by saying that without credit scores in the mix, half of
all minorities could see their auto insurance go up.

After today’s hearing, regulators will sift through the testimony and make recommendations to the legislature. Previous attempts to ban the use of credit scores for rate setting have failed.