For a counter-analysis to the FTC, see the June 2007 report by Chi Chi Wu of the National Consumer Law Center and Birnbaum of CEJ: Credit Scoring and Insurance: Costing Consumers Billions and Perpetuating the Economic Racial Divide Excerpt:

Study after study has documented the fact that credit scores disfavor minority consumers. Since 1994, at least 5 studies of traditional credit scores (for credit granting purposes) have shown that African Americans and Latinos have lower scores as a group. At least two studies by state insurance bureaus have found that African Americans and Latinos are overrepresented among consumers with low credit scores and under-represented among those with high credit scores. Furthermore, minority consumers are more likely to lack the credit history necessary to even generate a credit score.

Anti-discrimination laws present limited avenues to challenge the racial disparities created by credit scoring. There are some viable theories to challenge insurance scoring in home insurance, but fewer challenges available in auto insurance.

Finally, we argue that racial disparities in credit scoring are a product of historical economic discrimination against minorities. Government policies that economically boosted whites while leaving minorities behind are responsible for the racial wealth gap. Credit scores act as both a numerical reflection of that gap as well as a force widening the gap. We echo the call of many advocates to ban the use of insurance scoring in order to stop the perpetuation of economic discrimination. If states do continue to permit their use, insurers must be required to develop scoring systems that do not have a disparate impact on minority populations.

From the Boston Globe column by Cummings and D'Amato on the terrible new insurance deregulation proposal in Massachusetts:

When Insurance Commissioner Nonnie Burnes released her decision last week to change the way auto insurance is sold in Massachusetts, insurance companies popped the proverbial corks after reading the fine print. Burnes, recently appointed by Governor Patrick, also released a cover letter with the decision. The letter is so diametrically opposite in tone and content to the decision that it is hard to imagine the same person wrote them. [...] Consumer groups have consistently opposed this industry-sponsored proposal because it permits insurers to reject drivers by using the same unfair criteria -- credit scores, income, education, home ownership -- that the cover letter attacked.

As we point out in the PIRG/Consumers Union model state identity theft and credit reporting reform legislative package: the use of credit scores should be banned for auto and homeowners' insurance purposes for these reasons:

Insurers should not be able to use credit scores derived from credit reports to deny consumers insurance or to place consumers in higher-risk (higher-cost) product pools. Insurance companies claim that there is a correlation between a consumer's score and the chance that he or she will file a future insurance claim. But they have kept their scoring formulas secret, preventing an independent, public review of the actuarial soundness of their claim. In addition, any correlation is insufficient to justify the use of insurance credit scoring. Some studies demonstrate that credit scoring may simply be a double counting of other risk factors, such as policyholders' geographical locations, that already are taken into consideration when setting insurance rates. Scores also may be a proxy for rating factors that insurers are prohibited from using, such as race. This model law prohibits insurers from using information regarding a consumer's creditworthiness, credit standing, or credit capacity for the purpose of determining rates for insurance or eligibility for coverage.