Three Alaska Credit Bills Up for Vote This Week

Alaska legislators will consider three bills this week that would reportedly restrict or prohibit insurance companies’ use of credit information, potentially increasing the costs for auto and homeowners policies.

The Senate Labor and Commerce Committee has scheduled an April 22 hearing on Senate Bill 13. House Bill 5 and HB 47 will both be heard on April 23 before the House Labor and Commerce Committee.

Both HB 5 and HB 47 have been amended to incorporate provisions in the model bill approved by the National Conference of Insurance Legislators (NCOIL) last year.

The NCOIL model requires an insurer to notify an applicant for insurance that credit information will be used in underwriting and rating. It requires customer notification of the primary factors that resulted in an adverse action being taken. The NCOIL model requires insurance scoring models to be filed with the department of insurance and treats the models as trade secrets.

“The NCOIL model does not prohibit insurers’ use of this accurate and cost-effective underwriting and rating tool,” said Sam Sorich, vice president and western regional manager of the National Association of Independent Insurers (NAII). “The model is not perfect, but does embody solid consumer protections and mandates insurers disclose its use, while it also provides needed trade secret status to the computer models used to calculate the various factors used to determine a score.”

NAII will testify in opposition to SB 13, which would ban insurers’ use of credit.

“Insurance scores are objective tools that enable insurers to make accurate and fair underwriting and rating decisions,” Sorich said. “Without the use of insurance scores, the majority of consumers would pay higher premiums.”

Insurers combine such scores with other familiar factors, such as years of driving experience, previous crashes, and the age of a vehicle or home to form a clear picture of consumers’ risk. Insurance scores give no consideration to how much money people make, where they live, their age or marital status, Sorich said.

Topics Carriers Numbers Alaska