Ga. House Approves Bill Permitting Insurers’ Use of Credit-Based Scores

The Georgia House of Representatives approved a bill Monday that would permit insurers to use credit-based insurance scores in underwriting and rating homeowners and auto insurance coverage, according to the American Insurance Association (AIA). The bill will now be referred to the Senate Insurance Committee.

“Although H.B. 215 does put limits on insurers’ use of insurance scores, most notably preventing a denial, cancellation or non-renewal of coverage based solely on credit information, it also provides important consumer protections while affirming the right of insurers to use this cost-effective underwriting tool,” said Raymond Farmer, AIA assistant vice president, southeast region. “The use of insurance scores, along with other more traditional underwriting data, greatly improves insurers’ ability to predict future claims. This allows insurers to price more efficiently, accurately and consistently.”

H.B. 215, sponsored by Rep. Rich Golick (R), is based on the NCOIL model act, a consensus approach to addressing insurers’ use of insurance scores that was approved by that body in November 2002.

Provisions of H.B. 215 include the following:

• Prohibits an insurer from denying, canceling or non-renewing a policy of personal insurance solely on the basis of credit information, without consideration of any other applicable underwriting factor independent of credit information;
• Prohibits an insurer from basing an insured’s renewal rates for personal insurance solely upon credit information, without consideration of any other applicable factor independent of credit information;
• Requires an insurer to disclose to an applicant for insurance that credit information would be used in underwriting and rating;
• Requires an insurer to notify a consumer in the event of an adverse action based on credit information, including notification of up to four factors that were the primary influences on the adverse action;
• Provides indemnification of insurance agents/brokers who obtained credit information and/or insurance scores according to an insurer’s procedures and according to applicable law and regulation;
• Requires an insurer to file its scoring models with the state regulator and have them considered trade secrets.