PIACT Opposes Bill Prohibiting the Use of Credit History in Underwriting

The Professional Insurance Agents of Connecticut Inc. (PIACT) has issued a statement urging the Connecticut General Assembly’s Insurance & Real Estate Committee to oppose Committee Bill No. 5490.

The PIACT described the bill as seeking “to prohibit insurers from using credit history as a basis for increasing premiums or rates for people with low credit scores.” The insurance agents’ organization said it “maintains that the use of credit scoring should not be the only criteria used in the underwriting process, but concedes it should still be taken into consideration.”

“We do not object to the inclusion of credit scoring as a single criteria among others, but we oppose this bill as written because it would totally prohibit the use of credit information in rating personal automobile policies by all companies using credit information in their rating procedure,” stated PIACT immediate past President James Pascarella.

“While credit scoring can give individuals who have been responsible with their credit an opportunity to qualify for lower premiums, there are a few problems,” said the PIACT’s announcement.” It noted that “the criteria for which factors affect a person’s credit score are unclear and agents have sought a better explanation for some time.”

It also noted that “if a company tells a client that their insurance premium will not be a preferred rate, the agent needs to be able to explain how the client can improve their score.” The PIACT said “agents are unable to consistently offer this advice because the information is not available.”

“We believe that the Connecticut Insurance Department has taken a responsible position on the use of credit scoring,” Pascarella continued, “but we would like to see the development of guidelines for consumer information regarding general and individual credit factors that have an impact on rating.”