(LANSING, MI) - Michigan Office of Financial and Insurance Services (OFIS) Commissioner Frank M. Fitzgerald today announced public hearings to gather information on the use of consumer credit history to set insurance rates and the effect of this practice on consumers in Michigan.

"Insurance companies legally can, and do, use credit history to establish insurance rates in Michigan," said Fitzgerald. "This practice is considered a discount for homeowners and automobile insurance, just like discounts for seat belts or fire alarms. Because the link between credit history and the likelihood of a consumer filing a claim is not clear, the increasingly common practice of using credit to set insurance rates has raised many questions."

The public hearings are scheduled as follows:

• Tuesday, June 4 - Cadillac, Michigan (link to map)
  4:30 p.m. Wexford County Civic Center, 1320 North Mitchell
  
  
• Thursday, June 13 - Portage, Michigan (link to map)
  4:30 p.m. Portage City Hall, 7900 South Westnedge, City Council Chambers
  
  
• Saturday, June 15 - Port Huron, Michigan (link to map)
  11:30 a.m. City Hall, 200 Grand River, Board of Commissioners Room, 2nd Floor
  
  
• Tuesday, July 9 - Lansing, Michigan (link to map)
  4:30 p.m. Foster Community Center, 200 North Foster
  
  
• Thursday, July 11 - Grand Rapids, Michigan (link to map)
  5:30 p.m. City Hall, 300 Monroe, N.W., City Commission Chambers, 9th Floor
  
  
• Thursday, July 18 - Detroit, Michigan (link to map)
  4:30 p.m. Wayne County Community College, Downtown Campus, 1001 West Fort Street, Room 123

In Michigan, insurance companies offering automobile and/or homeowners insurance cannot refuse to write a policy, cancel a policy, or not renew a policy based on a person's credit history, sometimes referred to as a credit score. Credit scores are calculated from formulas based on factors in a person's credit history. The formulas and scores are established by credit scoring companies such as Fair Isaac or ChoicePoint.

Subjects and issues that are expected to be addressed at the public hearings include: formulas used in credit scoring; whether credit scores can accurately predict the likelihood of filing an insurance claim; the range of credit history rate discounts being used; consumer awareness of the use of credit scores for setting insurance rates; how the use of credit scores for insurance rates is explained to consumers; and the role of insurance agents.

Written testimony regarding the use of credit scoring for setting insurance rates is welcome. Written testimony will be accepted at the hearings or can be mailed to:
Michigan Office of Financial and Insurance Services, ATTN: Kathleen Parsons, Deputy Commissioner, Securities and Insurance Offerings Division, PO Box 30220, Lansing, MI 48909. During June and July, comments may also be forwarded to OFIS electronically by visiting the web site at http://www.michigan.gov/cis/0,1607,7-154-10555_12902_15784---,00.html.

"I hope that consumers and insurance company representatives will attend these hearings to share their views," added Fitzgerald. "I will release a report late this year about the practice of credit scoring. If I determine that credit history can accurately predict the likelihood of claims being filed, I will recommend to the legislature safeguards to better protect consumers."

OFIS provides consumer guides that contain example rates and information on automobile and homeowners insurance. The Buyers' Guide to Auto Insurance in Michigan can be accessed at http://www.michigan.gov/cis/0,1607,7-154-10555_13222_13224-34099--,00.html and the Buyers' Guide to Home and Renters Insurance can be accessed at http://www.michigan.gov/documents/
cis_ofis_00homegd_24989_7.pdf. Both guides are also available by calling OFIS toll free at 877-999-6442.

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The Michigan Office of Financial and Insurance Services (OFIS) is responsible for the regulation of Blue Cross Blue Shield, 28 HMOs, 144 banks, 285 credit unions, almost 1,500 insurance companies, 1,583 investment advisers, 2,164 securities broker-dealers, 6,000 consumer finance lenders, 89,000 insurance agents, and 120,715 securities agents. OFIS is part of the Department of Consumer and Industry Services and is primarily fee-funded, requiring minimal public tax dollars for its regulatory and consumer assistance activities. OFIS has insurance, financial institutions and securities information available online at the OFIS web site, www.michigan.gov/ofis, or at the Michigan government home page, www.michigan.gov. All information is also available through the OFIS toll free number, (877) 999-6442.

If you would like to receive OFIS press releases electronically, please email ofis-info@michigan.gov.