A committee hearing at the capitol looks at using an individual's credit rating when insurers evaluate potential clients.
A bill would prohibit an insurer from considering information in a person's credit report for purposes of issuing motor vehicle or property insurance or setting premiums. Committee Chair Jon Erpenbach ( pronounce ) (D-Middleton) questions the legitimacy of using credit reports rather than DOT driving records when considering risk.
“You're essentially saying that Wisconsin state Department of Transportation driving abstracts are less accurate or have a chance of being … or tend to be less accurate than Equifax or whatever?”
Insurance guy giving testimony answers the question affirmatively.
Eric Englund, President of the Wisconsin Insurance Alliance , defends the use of credit reports, saying it's just one tool used to help evaluate risk. He says DOT records don't show the whole picture, so it's a challenge to use every tool available to get the right balance.
“I know a guy who sometimes gets into his car and drives after he drinks and doesn't have any drunken driving tickets. And has a good motor vehicle record. MVRs (motor vehicle records) aren't perfect.”
State Representative Terese Berceau ( pronounce ) (D-Madison), who sponsored the Assembly version of the measure, says the industry is simply using credit information as a way to reduce paying out claims.
“It's a predatory practice with disproportionately negative affects on the young, the old, lower-income persons and minorities.”
One insurance guy testifying against the bill says credit scoring is blind to characteristics which should not be taken into account, like race and religion. One argument for using the credit report is that if someone makes bad financial decisions, it's likely they'll also make bad decisions elsewhere, including while driving.
(Hearing was held Thursday by the Committee on Health, Human Services, Insurance, and Job Creation at the state capitol. Bills: SB-259 and AB-387 )
AUDIO: Jackie Johnson report (1:50 MP3)
