Groups Blast FTC Report on Insurance Credit Scoring

WASHINGTON–Several consumer and civil rights groups are slamming a Federal Trade Commission report on the use of insurance credit scoring, calling the study “defective” and “biased insurance industry propaganda.” At issue is the use by insurers of consumers’ credit reports for determining insurance eligibility and premiums. The FTC issued its report in response to a congressional request, but groups that include the Consumer Federation of America say the report is based upon data provided by insurers and, as such, concludes incorrectly that the practice is not harmful. “The FTC study also confirms that, despite growing reliance on credit-based insurance scores, scant evidence exists to prove there is a meaningful connection between a consumer’s score and auto insurance losses,” the groups said in a jointly released statement. “The relationship between insurance credit scores and race is so strong that even though the FTC used data handpicked by the industry, it found that credit scoring discriminates against low income and minority consumers, and that insurance scoring was a proxy for race.”