Supreme Court Agrees to Hear Insurance Credit Score Cases

Thursday, January 18th, 2007

The U.S. Supreme Court has agreed to hear a case on insurers’ use of credit reports to affect the rates consumers pay for their insurance. Many insurance companies, including Geico, Progressive, Allstate and Ensurance use credit scoring as a factor in the price they charge for their insurance. A bad credit score can have a larger impact on the price you pay for insurance than multiple tickets. Many consumers are unaware of just how large the impact can be on the price they pay Delaware Insurance Commissioner Matt Denn has taken arguments against insurance industry use of credit scoring to the U.S. Supreme Court, filing a brief in a pending case involving the practice.Denn recruited 12 other state insurance commissioners to join Delaware in filing the brief.Denn’s amicus curiae, or “friend of the court,” brief was filed last Monday with the Supreme Court in Washington, D.C. in the cases of Safeco v. Burr and GEICO v. Edo.The brief urges the Supreme Court to uphold the decisions of the 9th Circuit Court of Appeals in the Safeco and GEICO cases that the companies willfully disregarded the FCRA by not sending adverse action notices to some consumers.Consumers in the cases claim that insurance companies Safeco and GEICO violated the federal Fair Credit Reporting Act. The consumers said that when a consumer’s credit information resulted in the consumer receiving a higher rate, insurers should have sent out “adverse action notices” required under FCRA and acted in “willful” disregard of the FCRA in not doing so.. ”I will continue to support legislation that would prohibit the use of credit scoring in auto and homeowners insurance, but I also thought it important to weigh in on this case,” Denn said. “As long as our law allows insurance companies to use credit scoring, consumers deserve to know when something in their credit score has resulted in them getting higher rates.”Safeco Insurance Co. of America, GEICO General Insurance Co., disagree that they should have notified people about adverse information in their credit reports.
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Many consumer groups contend that “Running credit scores” is tantamount to “Red lining.” That people who can least afford it are being charged more for the same coverage, even though they have equal driving records, and might be accident free. “Geico bumped up my rate over $300 because of my credit”. “I could understand if I had claims, but I haven’t cost an insurance company dollar one in over 8 years” said James Wilson of Harvey. Illinois.

We at Urban Insurance Agency agree, that Is why we offer insurance without credit scoring.

The high court combined Safeco Insurance v. Burr, 06-84 and GEICO General Insurance v. Edo, 06-100Source: Delaware Insurance Commissioner