Washington Commissioner Hits Wrong Note on Use of Credit, Insurers Say
The American Insurance Association (AIA) today said recent comments by Washington Insurance Commissioner Mike Kreidler about insurer use of credit are off-the-mark and ignore established consensus on the issue.
“Commissioner Kreidler’s latest comments are the continuation of his distinct efforts to restrict insurer use of credit that will likely stifle the marketplace and deprive Washington consumers of the benefits of additional choice and enhanced competition enjoyed by people in more than two dozen states,” said David Snyder, AIA vice president and assistant general counsel.
Insurer use of credit is allowed under federal law, and 26 states have enacted the National Conference of Insurance Legislator’s (NCOIL) Model Law on Credit as the standard to both govern insurer use of the tool and enumerate consumer protections, according to AIA. Only one state has legislatively banned insurer use of credit, and only for one line of insurance, while just three states have some type of regulatory prohibition.
“Credit-based insurance scoring is fair and objective – scores do not use race, ethnicity, or nationality as a factor – and, as numerous studies have shown, it helps predict the likelihood a person will file a claim. Better claims prediction helps insurers charge more accurate prices for the risks they assume. Consumers across the country enjoy the benefits of fierce competition among insurance companies that is often fueled by better underwriting and pricing – exactly what credit information helps achieve,” Snyder said.
In comments made at a Brookings Institution event today to release its new report, “From Poverty, Opportunity,” Commissioner Kreidler again attacked insurer use of credit and mischaracterized credit-based insurance scoring as unfairly discriminatory.
“We will continue to work with the commissioner with regard to the many benefits credit information has brought to the marketplace for both consumers and insurers,” Snyder said.
“Additionally, the Brookings Institution, which produced a solid report focusing on positive efforts such as urban business development and consumer financial education, mischaracterizes insurer use of credit and ignores the many state laws and regulations already in effect to protect consumers,” Snyder said.
Source: AIA
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