Two very different bills restricting insurers’ use of credit-based insurance scores are pending in Alaska House and Senate committees with no clear indication as to which is more likely to move.
National Association of Independent Insurers (NAII) Northwest Regional Manager Michael Harrold said both bills present some problems for insurers and consumers but some amendments might make a proposed committee substitute for Senate Bill 320 a workable compromise. The bill is pending in the Senate Labor and Commerce Committee.
The House Labor and Commerce Committee is considering a committee substitute for House Bill 395 that is a replica of the law enacted in Washington state earlier this month. Harrold said NAII opposed the Washington law because it would deprive most consumers of the lower insurance premiums to which their favorable insurance scores would entitle them.
The committee substitute for SB 320 provides:
A credit history can be used to cancel or deny insurance only in conjunction with other substantive underwriting factors.
An insurer cannot deny coverage in whole or in part, or establish a rate, based on the absence of a credit history.
Consumers must give written or verbal authorization before an insurer may use credit information pertaining to them.
Insurance rate filings using credit scoring methodologies are confidential and proprietary.
An insurer must re-underwrite or re-rate a policy if erroneous credit information were used in making an earlier decision.
Like the Washington law, the proposed committee substitute for HB 395 severely limits insurers’ ability to use credit information. Insurers could not cancel or nonrenew auto or homeowners insurance based on credit information and could use such information to deny personal insurance only in conjunction with other “substantive” underwriting factors. The committee substitute also would place a number of restrictions on the specific factors that could go into an insurance score (i.e., number of credit inquiries, medical collections, etc.).
The sponsor of SB 320, Sen. John Cowdery, R-Anchorage, asked the Senate committee to hold up action on the bill last Thursday (Apr. 18), apparently because of his uncertainty over whether he agreed with the committee substitute.
HB 395 was debated extensively in the House committee on Friday but time ran out before the debate could be completed or the committee could act on the measure. It is not clear when the bill could be taken up again.
During the committee meeting, Harrold strongly refuted the contention that the Washington law had been a compromise to which the insurance industry had agreed.
In other legislative action, SB 327 passed out of the Senate Transportation Committee and now will go to the Senate State Affairs Committee. SB 327 would provide a legislative fix for two detrimental state Supreme Court rulings. One of those held that a personal umbrella policy was an auto liability policy and therefore must include an offer for uninsured/underinsured motorist (UM/UIM) coverage. The other case held that UM/UIM coverage includes coverage for punitive damage if not specifically excluded in the liability insurance policy.
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