One Credit Score Ban Fails In Louisiana Senate

A Louisiana Senate bill that would ban insurer use of credit information to rate customers failed in committee today, but a measure with a more limited credit scoring ban remained alive in the House this afternoon.

Defeated in the Senate Insurance Committee by a 3-1 vote was a bill to repeal present law and prohibit use of credit scoring and information concerning a person's credit-worthiness in determining whether or not to issue or renew a policy or personal liability insurance.

The bill, SB 436, would have allowed use of credit scores to determine interest rates on financing of premium payments.

Meanwhile, the House was scheduled to work into the evening on a long agenda that included HB 318, designed to shield hurricane-impacted residents from credit scoring, which would only bar use of credit scoring information from 2005.

That measure just passed the House Insurance Committee earlier this week on a 7-6 vote. It was introduced by Rep. Cedric Richmond, D-New Orleans.

According to the language of HB 318, insurers would be barred from using any 2005 credit information “to underwrite or rate risks for any person who resided in an area that was gubernatorially declared to be in a state of disaster or emergency during” last year.

The American Insurance Association has voiced concern over the bill, which it says could harm consumers who improved their credit during 2005. AIA said that the bill's goal of easing the strain on victims of Hurricane Katrina has already been met by a directive from the state insurance commissioner.