The National Association of Independent Insurers has issued a bulletin indicating that a New York Assembly bill that would prohibit insurers from using credit scores in underwriting would do a greater disservice to consumers by eliminating a useful underwriting tool.
“Insurers use credit scores as only one underwriting criterion,” stated NAII assistant general counsel Gerald L. Zimmerman. “Credit scores do not reflect age, race or sex, and are an accurate and valuable underwriting tool.”
The amended bill, A.B. 4754-A, was scheduled to be considered by the Assembly Committee on Insurance yesterday. It would prohibit insurers from setting rates, canceling coverage, or making adverse underwriting decisions against an insured based on credit history or credit score. The bill specifies that a violation constitutes unfair claim settlement practices.
“In most cases, consumers actually benefit from the use of credit scoring, since it is nondiscriminatory and most credit histories are clean,” Zimmerman continued. “Removing credit scoring from an insurer’s underwriting methods will actually hurt the consumers legislators say they want to protect.”
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