On Tuesday, Colorado legislators “wisely” defeated a proposal to ban the use of credit-based insurance scores (SB 5), according to the American Insurance Association (AIA).
“The Senate Business and Commerce Committee carefully weighed the merits of this very predictive tool, and wisely decided to follow the precedent set by the 2004 Colorado legislature and so many other states in the country by allowing Coloradans to benefit from its use,” said Fred Bosse, AIA vice president, southwest region. “In addition to the regulation already in place, Colorado has one of the most restrictive set of consumer protections for credit-based insurance scoring in the country – it goes even further than the language adopted by the National Conference of Insurance Legislators.”
“Removing credit information from the insurance rating and underwriting process means people who live up to their commitments and who pay their bills on time may end up paying more than they should. This is unfair,” continued Bosse. “Credit-based insurance scores are one of several different tools used to differentiate between lower and higher insurance risks, so customers who are better risks pay better rates. The majority of policyholders actually benefit from the use of credit-based insurance scores.”
By a vote of five to two, the Senate Business and Commerce Committee defeated SB 5, sponsored by Sen. Doug Lamborn (R). AIA counsel Robert Ferm testified at the hearing in opposition to the bill. A similar bill (HB 1031) sponsored by Rep. Dorothy Butcher (D) has not been scheduled for a hearing.
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