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Auto insurance: Michigan supreme court to decide on credit scoring

The Michigan state supreme court will decide whether the state may ban the use of credit-based insurance scoring in underwriting in October, in a case that could have broad implications for auto insurance carriers.

Michigan governor Jennifer Granholm and the Michigan insurance regulatory agency in 2004 attempted to ban insurance companies from using consumer credit history to set rates for auto insurance premiums.

The issue has been tied up in court since, with insurance companies and the state trading appeals for the last several years. In August 2008, the state court of appeals overturned a lower-court decision preventing the state from banning credit scoring.

But in March of this year, when state insurance regulators began challenging rate filings that use credit-based insurance scoring as a factor, insurance companies sued in court and the state was ordered to stop the challenges.

The state and insurance groups both petitioned the highest court in the state to examine the case.

"The supreme court recognized that both parties asked the court to take the case, that this case deserves some immediate attention," said Jeffrey Junkas of the American Insurance Association, according to BestWeek.

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