ACIC Opposes Anti-Credit Bill

May 19, 2004

The Association of California Insurance Companies (ACIC) opposes legislation that would prohibit insurers from considering credit information in selling homeowners insurance policies.

“This bill — SB 1323 by Sen. Deborah Ortiz, D-Sacramento — ignores federal law which authorizes the use of credit information for insurance purposes and contradicts the position of nearly every other state, where credit has been recognized as an actuarially sound underwriting and rating tool,” said ACIC President Sam Sorich.

SB 1323 recently passed the Senate 22-13 and is pending action in the Assembly.

“Insurers that consider credit information in their underwriting and pricing decisions do so for only one reason – credit-based insurance scoring is an objective tool that allows insurers to underwrite or rate business with a greater degree of certainty and accuracy.

“More accurate underwriting and rating means that policyholders enjoy a rate more fairly based upon their own risk of loss – and the majority of consumers benefit through lower rates than would otherwise be possible,” said Sorich.

He added that credit-based insurance scoring does not replace traditional underwriting and rating factors; it simply adds another level to the process so that insurers make better informed and fairer decisions.

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Latest Comments

  • May 20, 2004 at 1:58 am
    insldy says:
    I do not like credit scoring either. A good friend of mine likes to pay cash for his purchases. The only thing he ever had a loan on was the house he purchased. He went to buy... read more
  • May 20, 2004 at 12:55 pm
    Patrick Butler says:
    Households with credit problems generally need to save money on auto insurance, as well as on everything else. They can drive less to save on gas (which is a windfall to insur... read more
  • May 20, 2004 at 12:18 pm
    John says:
    Credit scoring has tremendous impact upon the poor, minorities and the less educated. People in these groups tend to have poorer credit scores than whites, and/or those who ar... read more

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