LANSING, Mich. – Gov. Jennifer Granholm and Commissioner Linda Watters of the Office of Financial and Insurance Services proposed a new state rule April 26 to reduce base rates for all insurance customers by banning the use of credit scoring in determining rates for homeowners and auto insurance sold in Michigan. In making the announcement, Granholm said the proposed rule was the first step in her plan to address the rising cost of insurance in the state. "The use of credit scoring in Michigan has caused base rates to rise beyond what's affordable to many Michigan citizens, especially those who do not qualify for any kind of discount," said Granholm in a release from her office. "Insurance companies should be offering discounts based on the actions a consumer can take to reduce his or her insurance risk.not on an unrelated, unreliable credit score." According to the release, insurance companies have increased their overall base rates as a way to recoup the cost of offering a credit score discount to one group of consumers. Average auto insurance base rates in the state, according to the OFIS Buyers Guide to Auto insurance, increased between 45 and 90%, depending on location since 1999. Homeowner rates increased between 86 and 152%. Under the state's Essential Insurance Act, discounts for insurance must be applied uniformly across the state to all insured persons. In addition, rates must be based on a reasonable classification under the code. Watters said the use of credit scoring doesn't meet the requirements of a valid discount under the act. "The unreliability of the data in credit reports alone violates the intention of the Insurance Code," she stated. Gov. Granholm and Commissioner Watters were joined by legislators from southeast Michigan who have been actively working the issue in the state House of Representatives. Rep. Artina Tinsley Hardman (D-Detroit) called insurance credit scoring "nothing more than a subtle form of discrimination." If the proposed Act is passed, Michigan would become the first state in recent years to completely ban the use of credit scoring in determining home and auto insurance premiums. California bans the use for setting auto insurance rates, and Maryland does so in the determination of homeowner's insurance rates.