A Colorado bill that would have prohibited insurers from using credit reports and credit scoring in personal lines underwriting and rating was killed by the House Information and Technology Committee by a 6 to 4 vote.
HB 1126 was “a draconian measure that would have unnecessarily prevented insurers from using a viable underwriting tool,” said Michael Harrold, Northwest regional manager of the National Association of Independent Insurers.
The bill would have also allowed the state insurance department to revoke or suspend the licenses of insurers suspected of using credit information. NAII local counsel William Imig and other industry representatives testified against the bill, stressing that consumer credit information is only one element in underwriting criteria that include such variables as age, residence, driving records, and type of vehicle driven.
Several independent studies have proven a strong connection between credit history and the likelihood of an individual filing a claim, which is why insurers use credit as an underwriting tool.
“Although this bill was supported by the Division of Insurance, it’s apparent that the committee believed that the few formal complaints about the use of credit received by the DOI were insufficient to prohibit its use,” Harrold said.
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