Governor Granholm is calling for a ban on credit scoring as a way to rate auto and homeowners insurance premiums. At a news conference in Detroit Monday, the Governor called it an unfair practice and said she will be working with the state's insurance commissioner to ban credit scoring.
Most major insurance companies in Michigan use the scoring method, which has been in existence since 1998. Doug Cruce, Executive Director of the Insurance Institute of Michigan, says the idea behind the practice is that people who have higher credit risks are also higher risk when it comes to insurance losses. Cruce says there have been a number of studies to back it up.
State Representative Larry Julian, Chair of the Insurance Committee, says credit scoring works and he believes banning it would drive up the cost of premiums and then no one would get a discount.
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