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Senator Says Insurers Use of Credit Scores Unfair

February 3, 2005
By: Tim Carnahan
State Capital Bureau
Links: SB43

A state legislator says the use of credit scores to decide insurance rates is unfair to minorities.

But supporters of current policy say bad credit equals bad driving.

Tim Carnahan has more from the Capitol.

Story:
RunTime:
OutCue: SOC

Under current law, insurance companies can use credit scores to determine your insurance rates.

Saint Louis County Senator Rita Days is sponsoring a bill to ban the practice.

Actuality: DAYS1
RunTime: 9 secs
OutCue: "...lower income people."


Contents: "I felt it was, as I mentioned in committee, disproportionately affecting minorities and low-income people."

Data shows people with bad credit often have bad driving records.

However, former state Insurance Director Jay Angoff says that bad credit does not always equal bad driving.

He says a system emphasizing driving record, and not credit scores, could work and be fair to all drivers.

From the state Capitol, I'm Tim Carnahan.

###TDC###

A Saint Louis County Senator says Insurance Companies should not use credit scores when deciding car and home insurance rates.

Tim Carnahan has more from the Capitol.

Story:
RunTime:
OutCue: SOC

Senator Rita Days is sponsoring the bill, citing a Department of Insurance study showing the system generates lower scores for people living in diverse, low-income zip codes.

Former state Insurance Director Jay Angoff says people with low credit scores often have bad driving records.

But, he also says bad credit does not always equal bad driving.

Ending the practice makes sense makes sense to Angoff.

Actuality:ANGOFF1
RunTime: 9secs
OutCue: "what kind of driver you are."
Contents: "It just doesn't seem to make sense that whether or not you pay your bills is going to affect what kind of driver you are."

Supporters of current law say the proposal could drive insurance companies from Missouri and raise rates for all Missourians.

From the State Capitol, I'm Tim Carnahan.

###TDC###

A proposed law would ban insurance companies from using credit history to decide home and car insurance rates. Tim Carnahan has more from the Capitol.

Story:
RunTime:
OutCue: SOC

Saint Louis County Senator Rita Days proposed the bill.

She cites a Department of Insurance study showing the scoring system produces worse credit scores for people living in areas with many minorities.

Under the current system, those scores result in higher insurance rates.

Supporters of current law say Day's bill could drive business from Missouri.

Former state Insurance Director Jay Angoff disagrees.

Actuality:ANGOFF2
RunTime: 10secs
OutCue: "...rating factor."
Contents: "No, that's silly. No company left California after California prohibited insurers from using credit history as a rating factor."

Angoff says statistics show people with bad credit often have bad driving records.

But, he says chaging the system makes sense because bad credit does not always equal bad driving.

Reporting from the State Capitol, I'm Tim Carnahan.