Wis. Assembly Passes Budget Without Credit Prohibition

The Wisconsin State Assembly passed the Budget Reform Act early March 15, minus a proposed prohibition on insurers’ use of credit-based insurance scores.

The passage of the budget bill, combined with the demise of a stand-alone measure earlier this month, means that the credit issue is dead for the year in Wisconsin. The American Insurance Association (AIA), however, pledged to work with members of the legislature, state regulators and the agent community to provide enhanced consumer and agent education on the subject in the months ahead.

“Credit-based insurance scores are an accurate, legitimate, cost-effective tool for the underwriting and pricing of insurance policies,” Deirdre K. Manna, AIA assistant vice-president, midwest region, commeneted. “As long as they are not used to unfairly discriminate, their use should not be restricted, and AIA is pleased that the members of the Assembly seem to agree.”

In 1997, the Office of the Commissioner of Insurance (OCI) issued a bulletin restricting insurers’ ability to use credit as the sole basis for denial or nonrenewal of a policy. The bulletin also contains provisions related to disclosure and use of disputed information. Five years later, many other states are enacting legislation containing similar restrictions. “Insurers are following the provisions laid out in the OCI’s 1997 bulletin on use of credit,” Manna said. “Further legislation would have been costly, duplicative and flat-out unnecessary.”

While legislation to ban or restrict the use of credit is dead for the year, AIA said it would work with legislators, the OCI and the state’s agents to provide more education on the issue moving forward. “AIA and its member companies are aware of the need for more communication and education on this issue,” Manna said. “We look forward to working with all interested parties over the next several months in an effort to provide that education.”

Topics Legislation Wisconsin Training Development