The American Insurance Association opposes a Rhode Island bill (H 7705) that would ban the use of credit-based insurance scores, indicating that it would damage the state’s insurance marketplace.
“Credit-based insurance scores are a strong predictor of risk and allow insurers to more accurately assess the risk posed by a potential policyholder and more fairly price their policy, stated Laura Kersey, AIA assistant vice president, northeast region. “There is extensive research that shows a strong relationship between a person’s credit history and his or her risk as a policyholder.”
She added, “Rhode Island has a law regulating the use of credit-based insurance scores in a way that allows insurers to use this powerful tool while providing consumer protections. That law is less than two years old and it is working. Banning the use of credit-based insurance scores would mean better risks would pay higher insurance prices to subsidize policyholders who are higher risks.”
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