Last week the California Senate Banking, Finance and Insurance Committee approved two measurers that are detrimental to the underwriting process and will increase costs for consumers, says the American Insurance Association (AIA).
One of the bills passed by the committee is SB 150, which pertains to notifying consumers about adverse underwriting decisions.
“SB 150 will drive up costs without any real benefit to the consumer,” said Janine Gibford, AIA assistant vice president, western region. “Consumers have the right under current law to find out why an adverse underwriting decision is made. This bill creates numerous new notification requirements that will confuse policyholders. SB 150 also limits an insurer’s ability to review prior claims information in the process of determining if a driver qualifies for a good driver discount. This part of SB 150 undermines an insurers’ ability to comply with Proposition 103.”
The California Senate Banking, Finance and Insurance Committee approved SB 150 on a partisan vote of 6 to 4. The second adverse bill passed by this committee was SB 603, which would prohibit the use of credit information by insurers.
“Nearly every other state in the country has recognized credit as an actuarially sound underwriting and rating tool,” said Gibford. “Federal law has given insurers the authority to consider credit information for the past 30 years. The use of credit information provides consumers access to a wider spectrum of policies and ensures that consumers pay rates based on their likelihood of risk. Numerous studies have confirmed the correlation between credit history and costs of future insurance losses. AIA will continue to oppose this legislation for the third year in a row.”
The California Senate Banking, Finance and Insurance Committee approved SB 603 on a partisan vote of 6 to 4. Both measures will now move to the Senate Appropriations Committee.
Was this article valuable?
Here are more articles you may enjoy.