A majority of Nevada consumers would be unfairly penalized by legislation prohibiting insurance companies’ use of credit data in
determining rates and making underwriting decisions, according to the National Association of Independent Insurers (NAII).
“Without the ability to use credit-based insurance scores, most policyholders would pay more for insurance,” Sam Sorich, vice president and western regional manager of the NAII, commented.
“Insurance scores are valid predictors of insurance losses that help insurers to fairly and accurately price insurance for consumers. Banning the use of credit will take away the ability of insurance companies to identify responsible customers who should be rewarded with lower premiums. Instead, those responsible customers will have to pay higher premiums to subsidize those who are more likely to incur a loss,” he went on to say.
NAII plans to testify Wednesday before the Nevada Assembly Committee on Commerce & Labor against Assembly Bill 194, which would ban insurers’ use of insurance scores in both underwriting and rating practices.
“Insurance scores are objective and a majority of consumers pay less for their auto and homeowners policies as a result of its use,” Sorich said. “Numerous independent studies and data compiled by insurers demonstrate conclusively that an insurance score is an extremely accurate resource for predicting the likelihood that an individual will submit an insurance claim in the future. Insurers then can base their rates on the risk of loss, which is fairer to everyone.
“The insurance industry wants to be able to use the tools that will allow policyholders to pay premiums that accurately reflect their risk of loss,” Sorich said. “Insurance scores actually help most consumers get better rates because most people have good credit.”
Was this article valuable?
Here are more articles you may enjoy.