Idaho Committee Passes Credit-Based Score Bill

A state Senate committee recently approved a bill prohibiting insurers from charging a higher premium or deciding not to insure a person based primarily on his or her credit rating or history.

In opposing SB 1408, National Association of Independent Insurers (NAII) Northwest Regional Manager Michael Harrold said his major concern is uncertainty over the word “primarily.”

“This wording makes one think of a percentage emphasis, but companies don’t really place those types of weights on how they arrive at decisions to accept or rate an applicant,” Harrold said. He previously testified against the same wording in the original version of the bill, SB 1323. Before reporting SB 1408 out Thursday, the Senate Commerce and Human Resources Committee rejected a proposal to amend it to substitute “solely” for “primarily” and to make it apply only to nonrenewals of insurance contracts.

“The bottom line is that any legislation that impairs insurers’ use of credit-based insurance scores is harmful to consumers,” Harrold said.

“Numerous studies and experience have shown conclusively that there is very high correlation between insurance scores and the likelihood that a person will submit an insurance claim in the future. Using insurance scores enables insurers to base their rates on the risks involved and keep most of their customers, who have good scores, from paying more for insurance to subsidize those who are poor risks. Restricting the use of insurance scores is definitely anti-consumer.”