Calif. Panel Okays Credit Bill
NU Online News Service, May 10, 9:15 p.m. EDT–An insurance trade group said that a California bill it supports regulating use of credit information to rate home insurance customers may face its toughest hurdle in the State Senate.
That assessment by the American Insurance Association (AIA) follows a vote last week by the California Assembly Insurance Committee to release the measure for a vote on the floor.
Assemblyman Ron Calderon, D-Montebello, authored the legislation, which was sponsored by the Association of California Insurance Companies (ACIC).
The legislation is patterned after the National Conference of Insurance Legislators (NCOIL) model, which for the most part has been supported by insurance groups. Its provisions include regulations to prevent any action that would penalize applicants with no credit history, as well as prohibiting any adverse action for mere inquiries into credit.
Credit scoring for auto underwriting is banned in California by virtue of Proposition 103, which specifically authorizes the commission to set the underwriting criteria.
Nicole Mahrt, and AIA representative said she was optimistic about the chances of passage in the Democratic-controlled Assembly.
But the sledding could be a little rougher in the Senate, also controlled by Democrats.
"You have to remember this has to go through the Senate Insurance Committee, which in the past has passed bans on the [credit scoring] practice, the most recent one which was this year," she said.
That panel is chaired by Sen. Jackie Speiers, D-San Mateo, a noted critic of the insurance industry.
Jeff Fuller, ACIC general counsel, said it was difficult to predict whether or not passage of the bill would spur companies to use the practice. Insurers are permitted to use credit scoring now but there is no regulating legislation.
"My understanding is that companies have very little difficulty in comply with the model in those states that have enacted it," he said.
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