Thousands of residents of Oregon are happy about their lower insurance premiums, thanks to a year-old law about credit scoring, say the results of a survey by the Department of Consumer and Business Services (DCBS).
The law allows policyholders to request that their insurance company re-rate or re-price their homeowners or auto insurance policy once a year, if credit scores were used to price the policy when it was originally issued. If the customer’s current score qualifies them for a better rate, the insurer must lower the price, but if their credit score has worsened, the premiums cannot be increased.
The survey looked at data from several key homeowners and auto insurance providers, and found that there were more than 8,000 cases of discounts being given since the law went into effect on January 1, 2010. Those who requested re-rating received a collective discount of more than $800,000 – roughly $100/request.
Oregon Senator Suzanne Bonamici, a Democrat from the Portland/Beaverton area who chaired the Senate Consumer Protection and Public Affairs Committee in the 2009 legislature which passed the law (then known as Senate Bill 377) said, “The law is working as intended and people who have improved their credit profiles are being rewarded with better rates.”
Credit scoring is used by many insurance companies to help determine whether or not to issue a policy, or how much to charge. Once a policy is purchased, however, insurers are prohibited from using credit scores to raise premiums. The new law, however, allows customers to request re-rating once a year.
The data for the DCBS survey came from the eleven insurers that write the bulk of Oregon’s homeowners/auto insurance business. Based on the numbers, the average policyholder with good credit and multiple policies (example: a home and two cars) could save several hundred dollars over the term of their policies, generally a year for homeowners insurance and six months for auto insurance. The survey also showed that about 30-50% of the policyholders who asked for rerating qualified for lower premiums, though there was a lot of variance between insurance companies.
The law does not require insurers to inform policyholders of their right to request their annual re-rating, though some insurance companies do so voluntarily.