The insurance industry viewed the hearings as a chance to dispel misconceptions about insurance scoring and to highlight consumer benefits of the practice, according to NAII.

NAII and the Washington, D.C.-based American Insurance Association believe that insurance scores are a valid predictor of future losses. They also see insurance scores as one of many tools that insurers use to make sure that policyholders pay premiums that accurately reflect their risk without subsidizing others.

During the hearing, some insurance companies reported that from 60 percent to up to as much as 80 percent of their customers receive discounts as a result of credit scoring, NAII said.

The insurance industry maintains that "most people have good credit and can benefit from insurance scoring," said Jeffrey L. Brewer, an NAII spokesman.

The hearings made it clear that despite widespread use of insurance or credit scores, under current conditions there is a great deal of competition, NAII said.

"Consumers have choices and can shop around for the insurance company that offers them the best service, price, and type of policy that suits their needs," noted Mr. Brewer.

He pointed out that many consumers with complaints also testified that they were able to find insurance once they began shopping around, an observation shared by Deirdre K. Manna, AIA assistant vice president, Midwest region. Mr. Brewer called this is "an example of an effective marketplace."

As for insurers that are unwilling to communicate to their customers about how they use credit, Ms. Manna said they "are going to find themselves at a competitive disadvantage." She explained that it is "much easier, and considerably less expensive, to retain a customer than it is to attract a new one."

At the hearings, NAII also addressed the relationship between the use of credit information and insurance. "While at first glance many people do not see the connection, we believe that the link is risk-taking and responsible behavior."

Factors considered in developing an insurance score?such as whether a consumer pays bills on time or has filed for bankruptcy?can be generalized as being indicative of responsible behavior, Mr. Brewer said.

"We believe this type of careful, responsible behavior carries over into other areas of life," which, according to NAII, helps put the relationship of insurance scores and loss potential into perspective.

"The factors and weighting are developed to identify credit management patterns that have been proven to correlate with the probability of an insurance loss," Mr. Brewer explained. He added, "This tool helps to assess risk."

Both NAII and AIA stressed that Michigan already has one of the most restrictive laws on insurer use of insurance scores in that they may not use credit for underwriting decisions. By law, the scores can be used only to provide discounts to policyholders from the base rate.

Before the insurance department hearings, the Michigan House Insurance and Financial Services Committee had postponed further consideration of House Bill 5882, which prohibits an insurer from establishing or maintaining a premium discount plan based on credit information.

During the hearings, Mr. Fitzgerald announced that he will issue a report on the hearings by the end of the year. He said that if he determines that credit history can accurately predict the likelihood of claims being filed, he will recommend to the legislature safeguards to better protect consumers, NAII said.

Throughout the hearings, AIA pledged to work with OFIS, the legislature, and the state's agent association to improve educational efforts for both consumers and agents.

"It is abundantly clear from these hearings that the insurance industry can and should be doing a better job of educating people about this accurate, objective tool for risk assessment," Ms. Manna said.