Tlaib, Carter thump auto insurance credit scoring

Detroit resident Dotti Sharp has endured her auto insurance rates shooting up from about $160 a month three years ago to more than $200 a month today.

“It keeps rising up,” Sharp said on Monday. “I have no tickets. No accidents. So why does it keep going up?”

She joined two of her legislators during a news conference in Southwest Detroit. U.S. Rep. Rashida Tlaib (D-Detroit) and state Rep. Tyrone Carter (D-Detroit) called on their Capitol Hill and Lansing colleagues to address the longtime issue of high auto insurance rates in places like Detroit.

Tlaib, a former state House member, has specifically focused on non-driving elements that affect rates like credit scoring, marital status, and educational attainment.

Her legislation, House Resolution 1756, would bar credit bureaus from providing consumer reports or consumer information “to any person for use in making any decision to underwrite or rate auto insurance.”

Similarly, her effort would also prohibit auto insurers from using credit scores in auto insurance underwriting. She has secured support from 26 colleagues, all Democrats. They include fellow U.S. Reps. Debbie Dingell (D-Dearborn); Brenda Lawrence (D-Southfield); and Andy Levin (D-Bloomfield Twp.).

“The high insurance rates in the state are especially hitting families in Detroit and the metro area very hard,” Tlaib said. “I’m deeply concerned about the non-driving factors used to determine the rates.”  

There have been many efforts in Lansing over the years to create parity in auto insurance rates. A proposal backed by Quicken Loans founder Dan Gilbert and some House GOP members failed to attract enough support during Lame Duck last December.

Several bills this session, including SB 001, sponsored by state Sen. Aric Nesbitt (R-Lawton), are currently in play. Unlike Tlaib’s bill, however, Nesbitt’s focus is overhauling the no-fault system, rather non-driving factors like credit scoring.

So why do auto insurance companies use credit scores?

According to the Insurance Institute of Michigan, an industry advocacy group, it’s “to make fair and objective decisions and pricing more accurate, insurance companies need to have as much information as possible. Credit history provides a consistent and effective tool to evaluate risk that does not discriminate against any specific group of customers.”

Only three states ban the use of credit scores in determining auto insurance rates: California, Massachusetts and Hawaii, according to the Pew Charitable Trust, a nonprofit, non-governmental research organization.   

Tlaib and Carter will host a town hall meeting on the subject along with state Sen. Stephanie Chang (D-Detroit) and state Rep. Sherry Gay-Dagnogo (D-Detroit). The meeting  from 6 to 8 p.m. on April 24 is at Focus: HOPE, 1400 Oakman Blvd., Detroit, Mich. 48238.

Carter, a first-term state lawmaker who represents residents who live in the area where the Monday news conference was held, called for his colleagues to take action.

“I’ve been a licensed driver for over 40 years,” Carter said. “We’re tired of the talk. I’m just got my [auto insurance] renewal. It’s over $4,000 for six months [for three vehicles.] We’re not driving Lamborghinis. We have a Ford, a GM [General Motors] and a Chrysler. … This is an economic impediment for everyone in this district.”