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Bad credit shouldn't affect car insurance, experts say. States are listening.

Originally published:
Aug 9, 2021

The rise of ML and AI in insurance decisioning has triggered a larger discussion with regulators and the general public about less "intelligent" models that have gained prominence over the past couple of decades. That interest has, in turn, shown how prevalent credit scores are in model-based decisions across the industry, which this article covers in the context of new state-level regulatory action that is emerging. Citing a specious connection to an individual's driving record – the most obvious variable to measure for auto insurance – states like Colorado, New Jersey, New York and Oregon are considering joining California, Massachusetts, and Hawaii in outlawing the use of credit scores in lieu of federal bills that have yet to find their way to a vote in Congress. Given the high correlation between credit score and race, critics have long called the practice a form of "fairwashing" and part of a larger pattern of "economic racism" in the United States, and President Biden seems inclined to agree based on his comments at a February town hall.

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