The Colorado House rejected legislation Tuesday that would have prohibited insurers from using credit information as a factor for the acceptance, denial, renewal or rating of a potential insured for insurance underwriting purposes in connection with property/casualty insurance.
The Property Casualty Insurers Association of America (PCI) applauded the 26 to 39 vote defeating the measure. “This legislation runs counter to an established body of research which demonstrates that credit-based insurance scores are very closely related to the risk of loss,” said Kelly Campbell, regional manager and counsel for PCI. “Studies have found that drivers with the best credit are involved in fewer accidents. The use of credit information helps to make the price of insurance better match the risk of loss posed by the consumer. As a result, on average, lower-risk consumers will pay lower premiums.”
PCI noted that Colorado already has a law restricting the way insurers use credit information and it contains some of the strongest consumer safeguards in the nation. The industry added that the Colorado law is in the mainstream of how other states govern the use of credit information.
“When purchasing insurance coverage, consumers simply want a fair price that relates to the risk they represent,” said Campbell. “Credit information along with a variety of other factors, such as years of driving experience, previous crashes and the age of the vehicle, help insurers more accurately gauge the risk characteristics of each consumer.”
PCI is a national trade association composed of more than 1,000 member companies. Its members write more than $194 billion in annual premiums, 40.1 percent of the nation’s property/casualty insurance. Member companies write 51.3 percent of the U.S. automobile insurance market, 39 percent of the homeowners market, 32.1 percent of the commercial property and liability market, and 38.7 percent of the private workers compensation market.
Source: Property Casualty Insurers Association of America
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