An Alaska Senate committee has approved a bill prohibiting insurers from using credit-based insurance scores last week after amending the bill to make it apply to all insurance. Senate Bill 320 previously applied only to motor vehicle insurance.
The Senate Transportation Committee substitute bill also deleted a provision in SB 320 pertaining to auto crash parts, which apparently will be re-introduced as a separate bill. Sen. John Cowdery, R-Anchorage, the sponsor of SB 320, is chairman of the Transportation Committee.
National Association of Independent Insurers (NAII) Northwest Regional Manager Michael Harrold testified in opposition to SB 320, saying it would result in higher insurance rates for most consumers in Alaska.
“We have a lot of educational work ahead of us in Alaska,” Harrold said. “Senate Transportation Committee members didn’t simply attack the use of insurance scores, they questioned the validity of virtually every factor that insurers use in the underwriting process,” Harrold added.
“The very high correlation between insurance scores and the likelihood that a person will file an insurance claim in the future enables insurers to set rates that more closely reflect the risks involved,” Harrold said. “Since most consumers have good insurance scores, this means they will pay less for insurance and not subsidize people who are higher risks.
“Insurance scores are completely objective and have no relationship whatsoever to how much money a person makes nor where he or she lives. The scores show how responsibly people manage their money, no matter how much they earn. SB 320 is definitely anti-consumer.
Harrold also commented that SB 320 is anti-agent.
“If the ban on the use of credit information were to go into effect, agents would see themselves adversely selected by those insurers that could pre-screen potential policyholders under the provisions of the federal Fair Credit Reporting Act.”
As amended by the committee substitute, SB 320 now mirrors the prohibition on the use of credit information contained in Senate Bill 286 and House Bill 395. Another bill, House Bill 476, would prohibit the use of credit information in determining an auto insurance premium.
SB 320 next moves to the Senate Labor and Commerce Committee for further consideration.
Topics Alaska
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