Insurers to Fight Credit Scoring Ban on Colo. House Floor

January 28, 2008

Legislation that would prohibit insurers’ use of credit information narrowly advanced out of the Colorado House Business Affairs and Labor Committee Thursday on a 6-5 vote. According to the Property Casualty Insurers Association of America, the insurance industry will oppose the measure when it reaches the House floor for consideration.

The legislation (HB 1143) prohibits property/casualty underwriters from using credit scoring for the acceptance, denial, renewal, or rating of potential insureds.

“This legislation is a major step backward and could hurt the majority of consumers in Colorado,” said Kelly Campbell, regional manager and counsel for PCI. “Every credible study demonstrates the strong connection between credit information and risk of loss. As a result, the use of insurance scores enable insurers to make more accurate predictions about which consumers are likely to experience claims. Insurers have been using credit information for many years and some companies report that up to two-thirds of their customers have lower premiums due to having a good credit-based insurance score. If companies were prohibited from using these scores, the lowest risk customers end up paying more to subsidize higher risk consumers.”

Nearly half of the states, including Colorado, have enacted laws based on a model developed by the National Conference of Insurance Legislators (NCOIL) that allows insurers to use credit information and establishes consumer safeguards on the application of this underwriting factor. Colorado lawmakers passed its law in 2004.

Source: Property Casualty Insurers Association of America

Latest Comments

  • January 30, 2008 at 2:10 am
    lastbat says:
    Actually, wudchuck, your analogy is perfect for Dustin's point. Risk takers generally do not confine their risk-taking behaviors to one defined and discrete portion of their ... read more
  • January 30, 2008 at 12:34 pm
    wudchuck says:
    that wud be like your willing to take risks at the gambling table and you know where your limit is at. yet, how wud your personal feeling of craps or roulette evaluate into t... read more
  • January 30, 2008 at 12:32 pm
    Dustin says:
    You have to realize that credit is only PART of the equation. It also indicates if someone is willing to take risks as well. The logic is that one who will take risks with t... read more
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