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Insurance Credit Scoring

CEJ is the leading consumer voice on insurer's use of consumer credit information for underwriting and rating homeowners and auto insurance. CEJ participates in public policy discussions at a national level and in the states. We have testified before the National Association of Insurance Commissioners (NAIC), the National Conference of State Legislators (NCSL) and the National Conference of Insurance Legislators (NCOIL).

This page is organized chronologically with most recent listed first.  Scroll down for links to various testimony presented, including copies of actual insurance scoring models.

 Recent Activities

March 2008:  Birny Birnbaum asked state insurance regulators to push for a moratorium on insurance scoring as part of an overall program to assist consumers who are the victims of reckless and abusive mortgage lending practices and the resulting credit crisis.  Birnbaum's written testimony explains how insurance scoring will penalize consumers who are experience financial strain with higher auto and homeowners insurance rates through no fault of their own.

October 2007:  CEJ's Executive Director Birny Birnbaum testified before Congress on insurance credit scoring.  Birny's written testimony outlined the reasons why insurance scoring should be prohibited, refutes industry claims about insurance scoring, critiques the Federal Trade Commission report on insurance scoring and recommends that Congress seek more active involvement of state insurance regulators in any further study of insurance scoring.  Here is a link to the Committee's web site for other testimony and a video of the hearing.  Birny's testimony starts at minute 48 and then again at about minute 120 with an introduction by Congresswoman Waters:


A number of consumer and civil rights organizations issued a statement for the Congressional hearing and an earlier press release criticizing the Federal Trade Commission Report for allowing the insurance industry to control the study by dictating the data that could be used and for repeating unsupported industry claims as conclusions in the report.bb ij

August 2007:  Birny wrote a short piece for the Insurance Journal about the problems with insurance scoring and the Federal Trade Commission report .  Here's the link:  IJ Op Ed

July 2007:  The National Consumer Law Center (NCLC), with CEJ's assistance, published a report, Credit Scoring and Insurance: Costing Consumers Billions and Perpetuating the Economic Racial Divide The report summarizes the evidence showing the racial impact of insurance scoring and how the use of consumer credit information by insurers perpetuates and reinforces the racial wealth divide.  The report also shows that, contrary to insurer claims that scoring simply allows more accurate risk assessment, insurer profitability has skyrocketed with the widespread use of insurance scoring.  NCLC is a fantastic consumer advocacy organization -- check out their web site to see the incredible work they do on behalf of low-income consumers. 

August 2006:  Birny gave a presentation on insurance scoring to the Insurance Regulatory Examiners Society.  The presentation refutes in detail the various claims made by insurers in support of insurance scoring.

March 2005:  Birny wrote an op-ed for the National Underwriter about insurance scoring responding to an assortment of misinformation in an earlier op-ed by Ernie Csiszar, then President of the insurer trade association PCI.

January 2005:  CEJ issued a report -- Insurance Credit Scoring:  An Unfair Practice -- showing why insurance scoring is an inherently unfair and arbitrary practice.

November 2004:  The Toronto Star published a story on CEJ Executive Director Birny Birnbaum's talk on insurance scoring.

CEJ's Executive Director Birny Birnbaum prepared a report for the Ohio Civil Rights Commission in 2003 that serves as a primer on insurance credit scoring. 

Birny recently gave a talk at the Computers, Freedom and Privacy conference entitled Credit Scoring:  21st Century Redlining and the End of Insurance

TexasWatch has prepared a summary of the factors in summary of the factors and how they affect your score based upon a review of scoring models filed with the Texas Department of Insurance.

Testimony / Activity in the States

CEJ testifed on December 16, 2004 at a hearing before the Washington State Insurance Commissioner on a proposed regulation to require insurers to provide meaningful information to consumers who are the victims of insurers' use of consumer credit information.  See the CEJ's press release and testimony.

CEJ has advocated for the prohibition of insurers' use of credit scoring for underwriting, rating and conditioning payment plan eligibility for homeowners and auto insurance. Insurers often claim, or imply, that the federal Fair Credit Reporting Act preempts states from enacting such a ban. CEJ's attorney, D.J. Powers has analyzed the issue and determined that the FCRA does not preempt states from banning insurers' use of credit scoring.

Colorado -- Birny Birnbaum was invited to testify before Colorado House and Senate committees on insurance credit scoring in 2004

Texas -- CEJ prepared an extensive critique of the credit scoring study performed by the University of Texas Bureau of Business Research.  CEJ has prepared an extensive critique of the University of Texas Bureau of Business Research report on insurance credit scoring. The CEJ analysis revealed that the UT authors analyzed the relationship between credit scores and insurance losses using a methodology that was dismissed by the NAIC in 1996 as "counter-productive and misleading." CEJ also points out that the UT report shows that credit is a proxy for other underwriting and rating factors and is also correlated with race and income.

Michigan -- Birny Birnbaum was invited to join Governor Granholm at her press conference  announcing the beginning of a rulemaking process to prohibit the use of insurance credit scoring in Michigan.  CEJ joined with other consumer groups  to praise the Governor's action.  CEJ previously testified before the Michigan insurance commissioner in July 2002, explaining how insurance credit scoring violated Michigan's Essential Insurance Act.

Florida -- Birny Birnbaum served on the Commissioner's Insurance Credit Scoring Task Force and submitted detailed comments to the Task Force.

CEJ has also testified on insurance credit scoring in  Kansas , Alaska , Nevada. Louisiana, New York and Massachusetts.

National Association of Insurance Commissioners

CEJ criticized the NAIC for being "missing in action" on insurance credit scoring in June 2003. The presentation chided the NAIC for not providing state legislatures with an alternative to the NCOIL model.

CEJ submitted comments to the NAIC Credit Scoring Working Group on the need for, and feasibility of, a detailed, independent study of the disproportionate impact of insurer's use of consumer credit information on various groups of consumers

National Conference of Insurance Legislators

In 2002 and 2003, NCOIL developed a model law that legitimized insurance credit scoring and purportedly included consumer protections.  In fact, the model law has no substantive consumer protections.  CEJ commented commented on the proposed model in November 2002.  CEJ has detailed the critical shortcomings of the NCOIL model law in our state testimony, cited above.

CEJ has also presented comments and analysis on insurance credit scoring to the Casualty Actuarial Society and the National Insurance Task Force.