Delaware Lawmakers Unveil New Bill to Ban Credit Scoring

March 2, 2007

Delaware Insurance Commissioner Matt Denn and legislators on Friday unveiled legislation to ban all use of credit scores in setting auto and homeowner insurance rates.

Denn was joined by the prime sponsors of the bill (Senate Bill 31) including state Sen. Margaret Rose Henry, state Sen. Harris McDowell and state Rep. Helene Keeley, along with other legislators and community leaders.

In 2006, a similar bill was amended to ban use of credit scores only on auto and homeowner insurance policy renewals and passed the Senate, but was not brought up for a vote in the House of Representatives.

“The use of credit scores in setting insurance rates is unfair and unnecessary,” Denn said. “Credit reports are notoriously filled with errors and the use of credit scores to set insurance rates has been shown to have a disproportionate effect on minorities. And insurance companies have plenty of tools to evaluate each of us without using credit scores.”

“One’s credit has nothing to do with one’s risk to an insurance company as a driver or a homeowner. It just doesn’t make any sense,” Sen. Henry said. “Many, many people have told us over the last six months that they agree with us on this issue, so we’re going to try for the complete ban again.”

“This is an issue that has a considerable amount of public support behind it and we think it is an idea whose time has come,” Rep. Keeley said. “This is about fairness and about people’s pocketbooks.”

“Credit scoring in insurance is unfair and my constituents have asked me to try to put an end to it,” Sen. McDowell said. “I will be working this year to have a complete ban on the practice enacted.”

Friday’s endorsement of Senate Bill 31 also included Rep. Hazel Plant, The Rev. Dr. H. Ward Greer of Ezion-Mt. Carmel United Methodist Church, John Flaherty of Common Cause of Delaware, Mark Brunswick of the A. Philip Randolph Institute of Delaware and Rashmi Rangan of the Delaware Community Reinvestment Action Council.

“We have a lot of work to do for our side to prevail. Last year those of us who attended the debate saw the insurance industry come out in force,” Brunswick said. “This challenges us to begin the work of educating our communities on the progress of this legislation, going on record at the legislative hearings and perhaps holding our own hearings in our communities.”

If passed, Senate Bill 31 would make Delaware one of the strictest states in the country on the issue of credit scoring in insurance.

Source: Commissioner Matthew Denn

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