State judge upholds insurance company use of credit ratings

A state judge from Berrien County has ruled in favor of insurance companies and against the Michigan Office of Financial and Insurance Regulation in a suit over the state’s attempts to force insurance companies to stop charging higher rates to those with substandard credit ratings.

A Barry County Circuit judge ruled Friday that state insurance regulators can’t turn down insurance companies’ rate filings based on their use of credit scoring in setting their premiums.

Judge James Fisher issued an injunction halting the Office of Financial and Insurance Regulation from denying rate increase requests from companies that use the controversial practice.

Insurance Commissioner Ken Ross said the state will appeal the ruling.

The state argues that allowing insurance companies to consider credit scores when setting their rates violates Michigan law against discriminatory practices in the insurance industry, but the law is not explicit in rejecting this particular practice. The state legislature could fix that if they have the political will to do so.