SIGMAFOREX CURRENCY TRADING SUMMARY: Insurance companies denied rate increases in Michigan

LANSING --Â Seven auto insurance companies aren't getting rate increases in Michigan because they based their rates in part on drivers' credit scores, the state insurance commissioner said Tuesday.
The companies are being denied rate increases because premiums developed using credit scoring "are unfairly discriminatory," Office of Financial and Insurance Regulation Commissioner Ken Ross said.
Ross added that state rules ban the use of credit scoring to set rates, in part because credit information often has been found to be wrong.
Insurance companies have sued to keep their right to use credit scoring to set rates. They say the ratings are accurate and help many drivers get discounts on their insurance premiums. If they're taken out of the rate formulations, many good drivers would pay higher rates, they warn.
The case has dragged through the courts for years and now is before the Michigan Supreme Court.

Although the suit remains unresolved, Ross said Tuesday he can deny the rate increases. While his office is prohibited from enforcing the rule against using credit scoring, it's not banned from ruling against rate filings that use such a method, he said.
But Jeffrey L. Junkas, spokesman for the Midwest Region of the American Insurance Association, said the commissioner is wrong to deny insurers the right to consider credit scores when setting rates.
"Insurers have countless studies by state and federal agencies that validate the risk assessment power of credit-based insurance scores," he said in an e-mail to reporters.
In addition, he said Ross' comments that credit scores often contain faulty data ring hollow.

"Millions of transactions are successfully completed every day based on credit reports, and consumers have protections in state and federal law that allow them to get reports corrected and not be penalized financially," he said.
Ross said rates should be based on factors such as a consumer's driving behavior, number of miles driven and number of tickets rather than credit scores, which relate to debt and bill payment history he said is unrelated to the risk of having an accident.
"Insurance credit scoring does not in any way correlate to the safety of a driver," he said.
The seven companies denied increases are big players in the insurance market responsible for about 12 percent of the auto insurance policies issued in Michigan, Ross said.
Gov. Jennifer Granholm in last month's State of the State address asked auto insurers to freeze rates for 12 months so lawmakers have time to consider changes suggested by the state's insurance advocate he says will reduce rates. Granholm said the freeze would help Michigan residents hurt by the bad economy.
But only 13 small insurance companies accounting for 1 percent to 2 percent of the auto insurance market agreed to the freeze by the March 2 deadline.
That left nearly 100 auto insurers that haven't pledged to freeze rates, including many major insurers. Those companies now are getting close scrutiny from OFIR if they ask for rate increases.