Idaho Committee Approves Bill Restricting Use of Credit-Based Scores

The Idaho House Business Committee approved a bill March 7 prohibiting insurers from charging a higher premium or deciding not to insure a person based primarily on his or her credit rating or history. The bill now is expected to be approved by the full House and enacted into legislation.

In opposing Senate Bill 1408, National Association of Independent Insurers (NAII) Northwest Regional Manager Michael Harrold said insurers remain concerned with the uncertainty created by the use of the word “primarily.”

“Primarily is defined to have 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. “If companies are not confident with how they will be expected to comply with this legislation, they simply may decide that it is best not to use credit information in Idaho at all.”

Harrold said committee members recognized the concerns raised over the bill’s troubling phrasing, but they wanted to pass legislation they felt would put pressure on the industry to come to the table and bridge the gaps that have persisted in discussions over more clear and workable language.

“We will continue to work to find compromise language that could be enacted next year,” Harrold said. “In the meantime, many insurers will face troubling decisions in assessing whether they are comfortable using insurance scores in the Idaho marketplace.

“The uncertainty this legislation creates is unfortunate, as 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.”

Topics Legislation