Maryland Rejects Bills Banning Use of Credit Scoring

NU Online News Service, April 2

The Maryland legislature has rejected legislation that would have imposed an outright ban on the use of credit information in rating automobile insurance.

Committees in both Houses of the Maryland legislature declined to report such legislation to the full chambers.

Both the Senate Finance Committee and the House Economic Matters Committee rejected the bills, according to officials of the Property Casualty Insurers Association of America.

Maryland already has one of the most restrictive laws in the country regarding an insurer's use of credit information in underwriting and rating for homeowners and auto insurance, according to Richard Stokes, a PCI counsel.

Currently, Maryland prohibits homeowners insurers from using credit information in underwriting or rating. The law also prohibits private passenger automobile insurers from using credit information for underwriting, but allows such information in rating new policies within 40 percent rate collars--either a surcharge or discount of up to 40 percent, he said.

The proposed bills would have gone even further and repealed provisions of Maryland's law authorizing insurers to use credit information to rate a new automobile insurance policy, he said.

"The fact that both committees opposed the bill so strongly should be evidence that further efforts to curtail the use of credit information would be harmful to Maryland drivers," Stokes said.

He added that PCI plans to oppose any future efforts to restrict the use of this highly accurate underwriting tool, which, he said, "ultimately benefits most insurance consumers."