A law was recently passed in Massachusetts that prohibits insurers from taking into consideration consumers' credit scores when determining auto insurance rates.
The law, Charter 195 of the Acts of 2011, makes the ban on the practice official, but the prohibition on the use of credit for underwriting had already been in place as an administrative regulation.
Frank Mancini, president and CEO of the Massachusetts Association of Insurance Agents, applauded Governor Deval Patrick for signing the bill into law.
"We want to commend the legislature and the Patrick Administration for their leadership and support on this important issue," said Mancini in an interview with Insurance Journal.
Massachusetts insurance commissioner Joseph Murphy also praised the legislature, telling A.M. Best News Service that it ensures consumers' rates are based upon their driving performance and not their credit standing.
Meanwhile, Frank O'Brien of the Property Casualty Insurance Association of America opposed to the measure, telling the source it does away with one of the industry's best indicators of risk.
While using credit scores to underwrite car loans may now be against the law in Massachusetts, scores based upon credit bureau files can still be used for that purpose elsewhere. For that reason, consumers are well advised to scour their credit reports for examples of unfair or inaccurate marks.