For those of you who haven’t paid attention, the crunch time on your automobile and homeowners’ insurance rates is about to hit.
A newly formed consortium of insurance companies, assembled for the sole purpose of running a sleazy, misleading advertising campaign, is all over the radio telling consumers that if Senate Bill 31 passes next week, your insurance rates won’t go down.
Well, yes, they probably won’t go down for the average car or homeowner. But they certainly will go up — if they haven’t already — for those who don’t have the best of credit scores. And if you do have an excellent credit score today but run into a personal problem and miss a mortgage payment or two, you’ll end up paying higher insurance premiums.
That’s because there currently is no law in Delaware that prohibits insurance companies from using individual credit bureau scores to set insurance premiums.
Senate Bill 31, sponsored by Sen. Margaret Rose Henry on behalf of state Insurance Commissioner Matt Denn, would change that and the insurance companies are running scared.
By some cockeyed reasoning, insurance companies believe that people who don’t pay all their bills precisely on time, every month, are more apt to file claims against their auto and home insurance policies. The brokers don’t particularly care if you’ve never filed a claim for car damage or there’s never been a fire in your house; they only care if you’ve paid your Sears bill on time. Miss a month of paying Sears, make it up the next month and pay a late fee, and there’s a good chance your next annual insurance contract will jump.
Amazing predictions
It’s unfair, discriminatory and stupid. Insurance companies defend the practice by insisting that some all-knowing but confidential study has shown credit payments foretell claims submissions. How about driving records? How about the number of incidents submitted for home or personal claims?
Of course the insurance companies — who deservedly rank right down there with used rickshaw salesmen and journalists in the public’s credibility perception — want to know about your claim history before you even submit one. Give them your credit report and all of a sudden they become Carnac the Magnificent and can predict with uncanny precision how you intend to rip them off by submitting fraudulent damages.
Try as they might, none of them have been able to convince me, or ethical insurance commissioners, just how that might work.
I’ve been puzzled why so few people have taken offense to this practice, especially because it affects the rates they pay on such nerve-jerking items as car insurance.
But whether you take offense or not, don’t buy into this advertising campaign about how passing S.B. 31 will not allow insurance companies to lower your premiums. It simply is not so.
Several insurance companies, including Delaware’s largest, State Farm, have already cut rates or have announced they will without S.B. 31.
And isn’t the privacy of our personal finances — from Social Security numbers to credit card balances — already precariously close to being compromised? Why should we give our entire credit histories to insurance company agents whom we only know by first name through a toll-free number?
That the insurance companies are spending tens of thousands on this misleading radio advertising campaign, while already funding the most expensive lobbying corps in Dover, is evidence enough that they have discovered credit scoring is worth their while.
