A Supreme Court of Michigan’s recent decision on insurance regulation is a big victory for consumers. The state had tried to prevent insurance companies from charging consumers based on risk. That policy would have led to higher premiums for good car drivers by giving risky drivers lower rates. Besides the unfairness of such a cross-subsidy, the net result would be to encourage unsafe driving, leading to more accidents and deaths, which would serve to increase costs and higher premiums for all drivers. The Court cited an FTC report, and it affirmed the use of credit scores as a major predictor of claims in determining risk and premiums.
The result is a big win benefit for consumers, who will benefit from safe driving by receiving discounted rates.