In an unexpected but encouraging development according to the American Insurance Association (AIA) Feb. 5, a Minnesota legislative committee put off voting on a bill to ban the use of credit-based insurance scores.
The Minnesota House Commerce Committee delayed a vote on HF 2492 when a committee member offered an amendment that would have made the bill far less harmful to Minnesota consumers and insurance agents, the AIA commented.
“Proponents of this draconian bill say that they’re trying to protect Minnesota consumers and insurance agents, yet this bill does just the opposite,” said Paul C. Blume, Jr., AIA vice-president, Midwest region. “Yesterday’s events seem to indicate that some legislators are beginning to understand that fact, and we hope this delay will cause cooler heads to prevail on the issue.”
The use of credit-based insurance scores allows insurance companies to give more favorable rates to those consumers who are less likely to have losses. Insurance is, by definition, a spreading of risk in which “good” risks subsidize “bad” risks. The use of insurance scores allows for less subsidy of the second group by the first.
“While AIA and its member companies firmly oppose any restrictions on this valuable and accurate underwriting tool, we have been willing to work with all interested parties to come to a viable solution,” Blume said. “HB 2492 unfairly prevents Minnesotans from enjoying the lower costs and other benefits of a competitive insurance marketplace.”
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