New York Okays Insurer Backed Credit Score Bill
By Daniel Hays
NU Online News Service, June 28, 3:20 p.m. EDT?An insurance trade group that has been fighting for laws to permit insurers' controversial use of credit background in rating customers is counting another legislative victory in New York.[@@]
Property Casualty Insurers Association of America said they were hopeful that Gov. George Pataki will sign the measure based on a model drafted by the National Conference of Insurance Legislators, which PCI supports.
Donald Cleasby, PCI assistant vice president, said the governor had not signaled what his intentions might be, but he had heard nothing to indicate the measure would not be signed into law. The legislation was approved by Tuesday 60-0 in the Senate and 146-2 in the Assembly.
If the bill is signed by Gov. Pataki, New York would join Tennessee, Iowa and Colorado which also acted this year to pass the NCOIL model. The NCOIL bill does not ban credit scoring, but prevents its use as sole criteria for underwriting, requires disclosure and sets other restrictions.
Passage of the measure in New York last week was somewhat remarkable given that the Republican-dominated Senate and Democrat-controlled Senate have been locked in a stalemate on most issues and have temporarily adjourned without managing to pass a budget on time or approve legislation on other significant issues such as school funding.
Mr. Cleasby said New York has now joined "the majority of states that have enacted a reasonable and measured approach on insurers' use of credit." He said he had no immediate explanation how the legislation was able to avoid being caught up in the deadlock between the two houses, but he noted it was not the first session where the issue has been up for debate. "The pieces just fell into place," he said.
According to PCI, only three states?California, Hawaii and Maryland?have some form of credit scoring ban, and Massachusetts and Michigan are considering one. By PCI's count, 20 states have enacted legislation based on the NCOIL model over the past two years.
Opponents of credit scoring say it unfairly impacts minorities and fails to account for a variety of individual situations that can improperly impact a credit history check. An eight-state study of the process is currently underway, led by Missouri. An attorney representing PCI and National Association of Mutual Insurance Companies last week wrote the states involved saying their call for data to support the study was illegal.
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