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OAI: Rhode Island Bills Underscore Auto Insurance Ratings Issues

Providence, RI, February 13, 2012 --( Two bills introduced to the Rhode Island Legislature this year would together stop insurers from considering a trio of controversial factors that car insurers routinely use to price policies, according to Online Auto Insurance.

The three factors are credit history, education level and homeowner status, and insurers across the country have repeatedly argued that evaluating those factors helps them give more affordable car insurance to those who will get into fewer accidents and more expensive coverage to those who will get into more accidents.

But a handful of consumers groups have said that basing pricing - at least in part - on factors like credit, education and homeowner status disproportionately hurts middle- and low-income groups. Those groups get charged higher rates while being the ones least able to afford them, they say.

Insurers in this country are not allowed to price policies based on factors like race, ethnicity or income level. But consumer groups say that credit history and other variables serve as a proxy for income level and that the practice should be stopped.

Still, insurers have a lot of statistical evidence on their side of the debate.

Reports by state and federal entities have shown that credit information, for example, is a pretty good variable to look at when trying to determine how many accidents a person is going to get into and how severe those accidents are going to be.

“Credit-based insurance scores are effective predictors of risk under automobile insurance policies,” the authors of a 2007 Federal Trade Commission report wrote. “The use of scores is therefore likely to make the price of insurance better match the risk of loss posed by the consumer.”


With widespread industry support of the use of factors like credit scoring, the Rhode Island House members have an uphill battle ahead of them.

In the past five years, lawmakers in states across the country have continuously sought bans on credit-based policy pricing, but efforts in only one state, Massachusetts, have proved successful.

Aside for Massachusetts, California and Hawaii ban credit scoring.

For more on this and other coverage issues, visit to get access to informative resource pages and a quote-comparison generator that can help users track down the lowest rates available.

Contact Information
Online Auto Insurance
Benjamin Zitney

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