In comments to the panel as it prepares its congressionally mandated study, the p-c trade associations said the credit scoring provides more accurate risk assessment to insurance carriers.

American Insurance Association assistant general counsel Dave Snyder wrote that "it must be kept foremost in mind that independent studies, including those led by insurance regulators, have repeatedly found that the use of credit-based insurance scores is nondiscriminatory and beneficial."

Diana Lee, assistant vice president for the Property Casualty Insurers Association of America, wrote that a recent study conducted by the Texas Department of Insurance found that credit scoring not only improves pricing accuracy "but also yields new information not contained in other underwriting variables."

"More importantly, the TDI study indicated that a ban on credit history would homogenize risk classification and lead to an unfair pricing system where everybody would be charged the same price, regardless of risk," she wrote.

The FTC is conducting the study under the mandate of The Fair and Accurate Transactions of 2003, the successor to the Fair Credit Reporting Act. It is due at the end of this year.

The National Association of Insurance Commissioners had considered conducting such a study but met with stiff resistance from industry representatives, who felt it would be costly and unfair.

Several states then banded together to conduct their own study, but that effort fell apart in the face of the threat of a legal challenge from the insurance industry, Mr. Alldredge said.

In opposing the NAIC effort, industry representatives made the case that the FTC was planning such a study that could serve as the definitive one as to whether the practice was predictive loss along with whether it discriminated against minorities and the poor.

For credit scoring foes, the study could serve as a shot in the arm, as the practice is gaining legislative approval in more and more states while efforts to ban it are faltering.

"I am sure if they conduct a fair study, then it will show that the practice discriminates against the poor and minorities," said Robert Hunter, insurance director for the Consumer Federation of America.

As for credit scoring's purported bias against racial minorities, Mr. Alldredge said that this will be the first study to combine insurance scoring and ethnic demographic data.

"The insurance industry is not able to do that," Mr. Alldredge said. "And I am sure once the study is complete, it will not show any racial bias."

Birny Birnbaum, director of the Austin-based Center for Economic Justice, expressed concern that the FTC has yet to obtain the necessary homeowners and auto data to conduct a fair study, and instead is relying on recycled industry data.

"I am sure if they conduct the study under the statutory mandate, then it will show the inherent unfairness of the practice," he said.