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April 13, 2009

Industry Scores Win in Michigan

A Michigan circuit court judge ordered the Office of Financial and Insurance Regulation commissioner on Friday afternoon to cease his recent denials of rate filings based on the use of credit-based insurance scoring.

Since Gov. Jennifer Granholm’s state of the state address when she called for a voluntary rate freeze of auto rates, the OFIR has denied at least seven requests for rate increases citing that credit-based insurance scores are unfairly discriminatory.

In a March 10 press release, the commissioner announced that rate filings made by automobile insurance companies using insurance scores as a rating factor will automatically be denied on the ostensible basis that use of insurance scores is "unfairly discriminatory" and not permissible under the Insurance Code.

NAMIC and industry partners have felt that the rate denials were an effort to enforce Granholm’s call for a rate freeze and to revisit the long-standing battle over credit-based insurance scoring. In the industry’s opinion, the rate denials and press release are in direct conflict with the current injunction from the lower court. Consequently, the group filed a motion to enforce opinion and an order granting permanent injunction on March 31.

Friday’s opinion granted the industry’s petition and permanently enjoined OFIR from taking any action aimed at denying rates based on the use of credit as a factor in insurance scoring.

Although Friday’s decision is an affirmation for Michigan insurers and will ultimately serve consumers, the battle isn’t over. The larger case over OFIR’s 2005 promulgated rules banning credit-based insurance scoring is still waiting for a hearing before the Michigan Supreme Court.

Direct questions to NAMIC State Affairs Manager Erin Collins.

Posted: Monday, April 13, 2009 12:00:00 AM. Modified: Monday, April 13, 2009 9:48:05 AM.

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