"An insurance score measures only risk-relevant variables such as payment history and public records, which are highly predictive indicators of potential future risk," said Ann Weber, vice president of state government relations for the Property Casualty Insurers Association of America. "We believe it is unfair to deny a majority of consumers a lower insurance rate and force them to subsidize those who represent a higher risk."

A majority of state Supreme Court Justices concluded the Office of Financial and Insurance Services–since renamed the Office of Financial and Insurance Regulation (OFIR)–exceeded its authority about five years ago when it banned the use of the underwriting tool. The use of insurance scoring does not violate the state's insurance laws, the court ruled.

"The court ruled that the insurance commissioner's attempt to prevent the use of insurance scoring was invalid and unenforceable," said David Snyder, vice president and associate general counsel of the American Insurance Association. "In addition, the court ruled that insurance scoring accurately predicts risk and is not unfairly discriminatory."

The insurance office "failed to show that insurance scoring produces rates that are 'unfairly discriminatory,'" said the ruling.

Only four states have rules against the use of credit-based insurance scoring: California, Massachusetts, Hawaii and Maryland. A Federal Trade Commission study released several years ago validated the use of credit scores as an underwriting tool.

NAMIC said attention will now be turned to HB 5297–Michigan legislation to adopt a model law on credit scoring from the National Conference of Insurance Legislators.