Saving You Money For Life

One of the ripples largely unnoticed in the tsunami kicked up by the November elections was the decision by Oregon voters not to ban the use of credit scores in determining insurance rates for new customers. This vote occurred despite the fact that only months ago the California Insurance Commissioner unilaterally declared the process unacceptable and outlawed it in that state. Moreover, the Oregon legislature had voted in 2003 to outlaw the use of credit scores in evaluating the insurance premium costs for existing policy holders.

Heavily funded campaigns against the measure stressed the fact that ending the use of credit scores would result in higher premiums on homeowners, auto and commercial insurance rates. There was much discussion about the negative political advertising across the country in the last round of elections; it was estimated that for every dollar spent on a positive ad nine dollars went to negative tactics.

The threat of terrorists invading our shores should a Democratic House of Representatives be elected wasn’t sufficient to ward off a turnover of power on Capitol Hill. In Oregon however, negative advertising convinced the voters by a two to one margin that their credit scores should be a part of their insurance evaluations. The insurance industry spent four million dollars worth on the campaign and their sole theme was that the ban on using credit would result in higher insurance premiums for all.

“We are very pleased that Oregon voters understood the harm Measure 42 would have caused – higher insurance rates for 60 to 70 percent of Oregonians. This vote represents the public’s continuing support for insurance pricing that reflects risk. Voters understood that: this initiative would have unnecessarily increased rates,” said Kenton Brine, northwest regional manager, Property Casualty Insurers Association of America (PCI).

This issue has been controversial since the practice was adopted, which is a relatively recent development. That fact makes Mr. Brine’s comments sound somewhat self-serving; how did the insurance industry survive all those years without access to credit records?

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