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.
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.