Since then, bills seeking a complete ban on the use of insurance scoring have continued to sporadically pop up in legislative committees across the country, but insurer associations, armed with a well-honed message and reports from the Federal Trade Commission and various state insurance departments, were increasingly confident about their ability to defeat the measures (see accompanying story).

Now, however, consumer advocates are vowing to press the issue with more intensity given recent changes in the economy. Birny Birnbaum, executive director of the Center for Economic Justice in Austin, Texas, described what he sees as the challenges for consumers in today's environment.

"One of the things that's happening is because of the subprime [mortgage] crisis and the huge increase in the number of foreclosures, and the amount of financial stress on consumers through no fault of their own--through reckless and abusive lending practices--millions of consumers are going to see higher auto and homeowners insurance rates because of credit scoring, even though claims aren't increasing and even though consumers didn't really do anything wrong," he said.

These factors will likely lead state legislatures to view the issue with more scrutiny, according to J. Robert Hunter, director of insurance for the Consumer Federation of America in Washington.

"I expect that if we do go into a recession, there'll be a huge pickup [in legislative activity]," he predicted. "How can you adversely impact all those people who may lose their jobs, or their homes [because of] foreclosures? You certainly shouldn't be charging them for what may be beyond their control."

Of course, any activity in the states may be rendered moot if the federal government decides to take action. A new bill, HR 5633, has been introduced in the House of Representatives that would bar the use of credit information where there is a government finding of discrimination, or if the credit information serves as a proxy for race or ethnicity. (See this week's upfront "Top Stories" section for details.)

Also on the federal stage, Mr. Hunter said he will be working with Congress to perhaps get a second FTC study commissioned to once again evaluate the fairness of credit scoring.

But barring significant federal action, insurers and consumer groups will continue to fight the information war on insurance scoring state-by-state. "Many, many states are going to be battlegrounds," said Mr. Birnbaum, noting that not all legislatures will be in session this year, and predicting that 2009 could see even more activity.

In addition, there might be more driving this renewed interest among lawmakers than concerns about the credit market and the economy, some insurer groups said.

Neil Alldredge, vice president of state and regulatory affairs for the National Association of Mutual Insurance Companies, has another explanation for what he sees as a noticeable increase in insurance scoring legislative activity in the states: "I think a lot of it has to do with the fact that we had a lot of change in the makeup of state legislatures following the 2006 elections," he said, noting that 17 states have seen a change in the majority of one or both legislative chambers.

He explained that many of these states had already passed insurance scoring legislation consistent with the NCOIL model, but now legislators who weren't able to address or throw significant weight behind ban proposals are revisiting the enacted laws.

"In many of the states where we're seeing activity, you have legislators who were either not in the legislature, or were in the minority when their state enacted the law they have now...and so I think those folks now are having sort of their bite at the apple on the issue," according to Mr. Alldredge. And while the level of activity is not what it was prior to NCOIL's model, he said it is higher than in recent years.

But not all in the industry share that assessment. David Snyder, vice president and assistant general counsel for the American Insurance Association, said, "I think we're seeing about the level of activity we've seen in prior years. It doesn't go away, but it's not unexpected." He added, "It's not an unusual volume of activity, and there are thousands of bills introduced every year that don't go anywhere, and so we don't see anything particularly extraordinary."

Alex Hageli, manager of personal lines for the Property Casualty Insurers Association of America, concurred with Mr. Snyder's view. He agreed both that activity is dying down, rather than picking up, and that, for the most part, the ban bills that are being introduced have little chance of passing. "Every year, there are a number of ban bills introduced," he said. "A lot of them just sit in committee and don't go anywhere. But in some states, they move a little bit."

Regarding why bills are continually introduced every year, Mr. Hageli said, "I think what usually happens with the automatic introductions is that you have one or two members [of a legislature] who just flat out think [insurance scoring] is unfair to people. They think poor people necessarily have lower credit scores or insurance scores, which is not the case. And then from that basis they just assume that regardless of whether or not companies can justify its use, it should be banned."

While insurers may disagree on current and future legislative appetite regarding insurance scoring, they all are confident in their ability to defeat these measures as they arise. For one, Mr. Snyder said, the issue is not being driven by consumer dissatisfaction. He said insurance departments are not receiving a high level of complaints, even though, by law, consumers are notified when adverse action is taken against them because of credit information.

Furthermore, Jeffrey Junkas, an AIA spokesman, said the one time a measure to ban insurance scoring was brought directly before consumers for a vote--in Oregon in November 2006--it was defeated by more than a two-to-one margin.

Mr. Snyder said while banning the use of credit information has its appeal on an ideological level for some politicians, "it's just not objectively an issue that is being raised by real, live consumers."

Insurers have also been emboldened over the years by studies that, they say, justify the use of credit information in determining rates. Industry representatives have continually pointed to these studies when testifying before legislators, and the lawmakers, by and large, have accepted the findings as sufficient evidence to allow the use of insurance scoring.

Perhaps the most cited of these studies is one conducted by the FTC, released in July 2007. On the effectiveness of insurance scores in evaluating risks, the reports states: "Credit-based insurance scores are effective predictors of risk under automobile policies. They are predictive of the number of claims consumers file and the total cost of those claims....Thus, on average, higher-risk consumers will pay higher premiums and lower-risk consumers will pay lower premiums."

This finding is virtually word-for-word what insurer representatives have argued in the state legislatures, and it dovetails with the industry's own studies. Mr. Hageli said that a 2003 study by Epic Actuaries, which is now a part of Tillinghast, concluded that "individuals with the lowest insurance scores were found to incur 33 percent higher losses than average, while those with the highest scores incurred 19 percent lower losses than average. And at 33 percent higher, that's considered one of the most accurate actuarial tools [for insurers]."

While it cannot be denied that there is a correlation between credit scores and insurance risk, the unanswered question asked by legislators and opponents of the practice is, why? Even consumer groups do not doubt the existence of a correlation, but rather object to the absence of a plausible basis for the classification scheme.

"For example, a plausible basis might be number of accidents for an auto policyholder," Mr. Hunter explained. "If you have more accidents, the thesis is that you're demonstrating an inability to be a good driver....Then you test [the thesis] with data and you find out that's true."

Lately, though, Mr. Hunter said the industry has begun using data-mining methods to find correlations that are not based on a thesis. "In recent years, with all this data, people are coming up with...correlations and saying, 'Oh, look what we found.' Obviously, you may find a correlation in certain data, but it ought to be testing a thesis so that, for one thing, people can understand how to avoid the risk, and it should be risk-related somehow," he said.

"If you talk to the industry about that, they're going to say, 'Hunter's wrong--in the actuarial standards, you don't have to have a cause and effect relationship,'" he added. "I'm not saying a 'cause and effect relationship.' Cause and effect doesn't happen...I'm talking about a logical relationship."

Industry representatives are less interested in the why. "We can't explain it," Mr. Hageli admitted. "We don't know why the correlation exists, but it does."

Insurers have seen that insurance scoring can predict risk, and predict it well--and that, essentially, is where the argument ends for them. NAMIC's Mr. Alldredge summed this up while speaking generally about the effectiveness of using credit to predict risk.

"Most studies have shown that, for some reason, insurance scoring tends to measure variables and factors that other underwriting tools don't catch," he said. Without insurance scoring, he added, "you do not get the same accuracy in terms of predicting the loss."

Mr. Hageli said this greater degree of accuracy has allowed for a "substantial increase of rating categories from prior years." Previously, he said, insurers had a small number of rating tiers, but "with insurance scoring, it's allowed for a much more precise measure of risk, which allows for much greater stratification of risk over many more tiers than what you previously had." Some companies, he noted, have gone from three-to-200 rating tiers, and this has "allowed for much greater customization of pricing."

Up to this point, evidence presented by the industry demonstrating that insurance scoring does predict risk--even without a plausible basis for the correlation--has swayed the majority of legislators to leave the practice alone.

PCI's Mr. Hageli said that "when we go into these committee hearings and we show them the evidence and the studies, like the FTC study, that demonstrate that [insurance scoring] is actuarially justified--that for whatever reason insurance scoring is predictive of future risk, and that shouldn't people who represent a greater risk pay more for their insurance--that's usually the clincher for convincing people to continue to allow insurance scoring."

Mr. Birnbaum sees a different reason legislators are accepting the industry's arguments--threat-mongering. "I think the main argument that is swaying legislators is insurer threat--that all these consumers are going to get rate increases if you ban credit scoring."

He called this a "false threat," noting that insurers would not raise the rates on customers they consider most favorable "because there are going to be any number of insurance companies that would jump to get these so-called best and least-risky customers."

As the insurers and consumer groups continue to make their arguments to state legislators, to Congress and even in the courts, industry representatives remain confident in their message, even if some express concern about increased legislative activity.

"A couple of years ago, I predicted that we'd seen the high water mark on the issue, and I thought the issue would die down," said NAMIC's Mr. Alldredge. "I turned out to be wrong about that one, [but] I feel pretty confident about the industry's ability to defend the use [of insurance scores] in state legislatures."

For his part, Mr. Hunter has vowed to continue to make his case to legislators as well. "There are times when we've had some success, and there are times when we get beat," he said, "but we're not going away. It's not like it's going to be over some day. It's not over until it's gone."