Sink Targets Role Of Credit In Rates
By RUSSELL RAY
Published: March 20, 2009
Auto insurers should not be allowed to use credit scores to determine rates, especially in tough economic times, two state officials said Thursday.
Alex Sink, Florida’s chief financial officer, and Sean Shaw, the state’s insurance consumer advocate, met with reporters and urged the Legislature to end the practice.
As credit card companies slash credit limits and consumer debt climbs amid a global recession, credit scores for many consumers are being downgraded. That means you could be denied or required to pay more for auto insurance.
"It’s outrageous that insurance companies are punishing responsible consumers who are negatively affected by the current economic crisis through no fault of their own," Shaw said. "We can protect Floridians by outlawing the use of credit scoring."
State Sen. Ronda Storms, R-Valrico, and Rep. Priscilla Taylor, D-West Palm Beach, have introduced bills that would bar insurers from using credit scores to determine rates.
"They’re just kicking people when they’re down," Sink said.
A person’s credit score has no connection to their driving record and shouldn’t be used to deny coverage or raise premiums, Shaw said.
Michal Connolly, a spokeswoman for State Farm, Florida’s largest auto insurer, said the use of credit scores is one of many factors the company uses to determine rates and that the practice is justified.
"Study after study has shown that there is really an undeniable correlation between credit information and insurance risk," Connolly said.
Reporter Russell Ray can be reached at (813) 259-7870.