Massachusetts Bans Use of Credit Scores to Set Insurance Rates or Refuse Coverage
October 11, 2007
• by Staff
BOSTON --- Citing a new set of state rules, Massachusetts Insurance Commissioner Nonnie Burnes last week banned insurance companies from using drivers' credit scores to set rates or make coverage decisions.
The state's new set of regulations, aimed at opening the state's auto insurance market to more competition, includes restrictions on insurers' use of consumer credit histories. Burnes said she will study how the bans affect the insurance market during the transition.
Massachusetts is the only state in which state regulators, rather than the market, now set car insurance rates. There are only 19 insurance companies that currently write auto insurance policies in the state, AP reported. But under the new "managed competition" system, companies will file their own rates with regulators. The new market is set to begin in April. The transition will be completed by March 31, 2009.
Originally posted on Fleet Financials