Credit Scoring Restrictions Dominate P&C “Watch List”

At this time of year, the state legislatures continue to generally be in the early stages of bills moving through the respective chambers. Some familiar underwriting issues, specific to the property and casualty (P&C) insurance industry, are definitely accounted for in the current sessions.

It is important for insurers to not only monitor this activity to determine how they might respond now, but also look for trends that are occurring across the country so they can anticipate business decisions that might need to be made in the near future.

As we have seen in prior years, proposed credit scoring restrictions continue to be a focus in many states. Here is a brief recap of some recently introduced bills:  

  • Illinois: HB 5839 proposes to require insurers, which are using credit information to underwrite or rate risks, to recalculate the insured's insurance score at the request of the insured, but not more than once annually. The purpose is to determine whether the insured is eligible for a reduction in his or her premium rate.
  • Kentucky: SB 121 would require insurers to provide reasonable exceptions for extraordinary life circumstances, as well as prohibit insurers from declining, refusing to renew or cancel an automobile policy solely because of credit history, lack of credit history or extraordinary life circumstances that directly influence the credit history of the applicant or insured. SB 31 would declare the use of credit history or the lack of credit history, including a credit score or insurance score, of an insured or an applicant as the basis in whole or in part to decline, refuse to renew, cancel, rate, or determine the premium rate for any insurance policy, contract, or plan of insurance an unfair or deceptive trade practice. 
  • Maryland: SB 785 proposes a prohibition on private passenger motor vehicle insurers from rating a risk based, in whole or in part, on the credit history of an applicant or insured in any manner. 
  • Minnesota: HF 2279 would require that no insurer be permitted to limit coverage under or determine the premium rate for any person, in whole or in part, on the basis of credit information, without consideration and inclusion of any other applicable underwriting factor. Insurers would also not be permitted to use credit as a factor in adverse decision considerations if the credit information is adversely impacted or cannot be generated due to the absence of credit history.
  • Missouri: HB 1406 proposes to prohibit taking any adverse action based on a credit report or insurance credit score against a person currently insured under an existing insurance contract with the insurer. 
  • Rhode Island: Both SB 2296 and HB 7411 would prevent the consideration of an applicant's credit history in determining automobile insurance rates.
  • Virginia: HB 355 proposes prohibiting an insurer from setting rates or making pricing decisions based on a person’s credit information contained in a consumer report, bearing on an individual’s creditworthiness, credit standing, or credit capacity except as otherwise permitted under existing Virginia law. Also, an insurer would not be permitted to take any adverse action based in whole or in part upon an individual applicant’s or individual insured’s credit information contained in a consumer report if the applicant or insured has a perfect driving record. Both HB 432 and SB 350 would prohibit insurers from setting rates or making pricing decisions based on a person’s credit history, lack of history or credit score. 
  • West Virginia: HB 2049 proposes to prohibit the use of a person's credit history in insurance transactions, while HB 2319 would prohibit the use of a credit score in casualty insurance rate filings. HB 2467 proposes to prohibit credit scoring from being considered as a factor in calculating rates in homeowners or automobile liability policies.
  • Of course, credit scoring isn’t the only topic in focus. Underwriting issues continue to nab some of the spotlight, too. Rhode Island and Connecticut are two states that have seen some activity already, with new proposals regarding automobile liability and homeowners’ insurance policies being considered. 

    While these introduced bills provide a glimpse into what proposals are winding through the state halls, there are undoubtedly more to be filed for both underwriting issues, as well as claims. These are clearly perennial issues, and should be at the top of insurance compliance departments’ “watch list” as they monitor regulatory and legislative changes for all lines of business, and especially personal auto and homeowners’ insurance.

    Page 1 of 2
    Comments

    Resource Center

    View All »

    Complimentary Case Study: Helping achieve your financial goals By:...

    Find out how a Special Investigation Union used TLOxp to save the company money and...

    Do Your Clients Hold The Right CDL License?

    Learn about the various classes of CDL Licenses and the industries that are impacted by...

    Integrated Content & Communications: A Key Business Issue For Insurers

    Insurers are renewing their focus on top line growth, and many are learning that growth...

    High Risk Insurance Coverage in the E&S Market

    Experts discuss market conditions, trends and projected growth in a rapidly changing niche.

    Top E-Signature Security Requirements

    This white paper covers the most important security features to look for when evaluating e-signatures...

    EPLI Programs Crafted Just For Your Clients

    Bring us your restaurant clients, associations and other groups and we’ll help you win more...

    Is It Time To Step Up And Own An Agency?

    Download this eBook for insight on how to determine if owning an agency is right...

    Claims - The Good The Bad And The Ugly

    Fraudulent claims cost the industry and the public thousands of dollars in losses. This article...

    Leveraging BI for Improved Claims Performance and Results

    If claims organizations do not avail themselves of the latest business intelligence (BI) tools, they...

    Top 10 Legal Requirements for E-Signatures in Insurance

    Want to make sure you’ve covered all your bases when adopting e-signatures? Learn how to...

    PropertyCasualty360 Daily eNews

    Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

    Advertisement. Closing in 15 seconds.