Insurance groups are criticizing passage of Senate Bill 259 by the Wisconsin Senate late on Thursday, Jan. 31st. Senate Bill 259 would forbid insurers from considering information in an individual’s credit report for issuing, renewing, or setting premiums for auto or homeowner’s insurance. It also prohibits a rating plan for motor vehicle or property insurance from using information in an individual’s credit report as a rating factor.
According to the American Insurance Association (AIA), the bill passed on a vote of 17-15 with one senator abstaining. Originally Senate Bill 259 was listed to be heard third on the agenda, but the bill was delayed numerous times and eventually discussed during a very spirited floor debate with comments by numerous senators on both sides of the issue. A request was made to send the bill back to the Senate Committee on Health, Human Services, Insurance, and Job Creation for further consideration and industry input, but that vote failed. A final roll call vote then was immediately called and the bill passed the chamber.
The AIA said the that passage of this bill is “bad public policy that, if eventually passed by the General Assembly and enacted, will hurt a majority of Wisconsin consumers.”
Another insurance trade group agrees.
The National Association of Mutual Insurance Companies (NAMIC), homebased in Indianapolis, said that Wisconsin’s ranking as one of the lowest-paying states for auto and homeowners’ insurance will be threatened with the passage of this bill.
“Supporters of this legislation have clearly ignored the multitude of studies showing that credit-based insurance scoring is an objective and actuarially valid tool that enables insurers to better predict the likelihood of future claims and the cost of those claims,” said Robert Detlefsen, NAMIC’s vice president of public policy. “The practice is a major factor in holding down insurance rates for the great majority of Wisconsinites who have good credit histories.”
The bill is expected to be debated again on the floor of the General Assembly and faces a tougher battle to be approved according to some including the Professional Insurance Agents of Wisconsin who have been monitoring the bill with a different perspective.
“Our concern is that while companies have developed this method for determining rates, agents are on the front line and are in an awkward position because the insured has suffered a rate increase because of a credit score. The agent has to look that customer in the eye and explain it to them,” saud Ron Von Haden, executive vice president for the Professional Insurance Agents of Wisconsin.
At this writing it is unclear when the General Assembly will hear the bill.
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