Utah Bill Prohibits Credit-Based Scores from Being ‘Primary’ Reason for Insurers’ Decisions

January 29, 2002

A bill prohibiting auto insurers’ use of credit-based insurance scores was modified in a House committee today to say such scores cannot be the “primary” reason for any action by the insurer. The bill also now would prohibit the use of insurance scores in non-renewing or canceling an insurance policy.

National Association of Independent Insurers (NAII) Counsel Ann Weber said the ambiguity inherent in the reference to “primary” reason appears to be one step short of the outright ban contained in the original bill and still would be harmful to most consumers. .After modifying House Bill 110 along those lines, the House Business and Labor Committee reported it out favorably.

“Any restriction in insurers’ use of insurance scores will impair their ability to ensure that their customers pay premiums that match their risk,” she said. “Depriving insurers of this valuable tool will result in higher premiums for most consumers or make insurance less available to them.

“Studies have clearly shown that insurance scores accurately predict the likelihood that a person will file an auto or homeowners claim.

Restricting their use will mean that most drivers, who have good insurance scores, will pay higher premiums and will subsidize those drivers with lower scores, who will have more accidents.”

NAII and other insurance interests have been working with legislators and the Insurance Department to head off any law or regulation that would hinder insurers’ use of insurance scores and thus not be in the public interest.

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