Proposed legislation to prohibit insurers from considering a consumer’s credit history would take away discounted rates for the majority of Nevada policyholders, according to the Property Casualty Insurers Association of America (PCI).
PCI testified recently before the Nevada Assembly Commerce & Labor Committee in Carson City in opposition to Assembly Bill 162, authored by Assemblyman Paul Aizley. The legislation would prohibit insurers from considering a consumer’s credit history to underwrite or rate personal insurance.
PCI explained that insurers have used credit scoring for decades as an effective means of predicting insurance loss and explained the ways in which insurers use such information. PCI pointed out most consumers have good credit-based insurance scores and benefit accordingly – with rates refined to reduce disproportionate subsidies of higher risk individuals.
“Every reputable study on this issue has reached the same conclusion: there is a very high correlation between insurance scores and the likelihood of filing insurance claims,” said Mark Sektnan, PCI vice president. “The numerous studies also show that insurance scoring does not adversely affect minorities.”
Nevada already has one of the strongest consumer protection laws in the country that is based on the model developed by the National Conference of Insurance Legislators (NCOIL), PCI said. The NCOIL model has specific protections that deal with medical bills, shopping for a home or car, or the use of disputed information. Most importantly, this model prevents insurance scores from including factors that constitute unfair discrimination.
This year PCI is supporting a bill sponsored by the division, AB 74, which will adopt the changes to the NCOIL model law protecting consumers’ insurance scores from adverse events beyond their control like illnesses, unemployment, divorce or identity theft.
PCI will continue to provide testimony before state legislators to oppose restrictions on insurers’ ability to use a consumer’s credit history as a valuable underwriting and rating tool. The Committee has not taken a vote on AB 162 or AB 74.
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