Filed Under:Carrier Innovations, Regulation/Legislation

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.

  • 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.

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