Legislators in Colorado are considering a bill that would require additional disclosures of information that insurers use for underwriting personal lines property/casualty insurance policies.
House Bill 11-1127, concerning the use of consumer credit information, would make the filing of actuarial justification mandatory for insurers that use insurance scores to underwrite and rate risks. Additionally, the bill would clarify that an “adverse action” with regard to insurance includes denying a consumer a discount or placing a consumer in a higher rating tier. Auto insurers would be required to comply with the same rules for using credit information as property/casualty insurers. And the bill would restrict an employer’s use of consumer credit information.
The American Insurance Association says HB 1127 would require insurers to disclose proprietary information that is not required by other states.
“Insurers’ use of credit information is widely accepted across the country,” said Robert Ferm, AIA’s Colorado counsel. “Restricting its use and requiring insurers to disclose proprietary information is a disservice to insurers and Colorado consumers alike. This legislation would require yet another burdensome Colorado specific regulation.”
The association believes that insurance scoring benefits consumers through lower rates. “Insurance scoring is highly predictive of risk and helps increase the availability of insurance products because this tool enables insurers to more accurately price risk,” Ferm explained.
The House State, Veterans & Military Affairs Committee voted 6-to-3 to indefinitely postpone further consideration of the legislation.
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