Bill bans use of credit to set insurance rates Party-line Assembly vote limits use of information in pricing policies By BEN KIECKHEFER THE ASSOCIATED PRESS CARSON CITY -- The Nevada Assembly voted along party lines Monday to ban the use of credit reports in setting insurance rates. The bill would prohibit insurers from using information from a consumer credit report in determining rates for new or renewed policies or when establishing payment plans for customers. Democrats pushed Assembly Bill 194 as a consumer protection measure while Republicans argued certain credit information does correlate to insurance risk. Republicans also said Maryland passed a similar proposal and saw their insurance rates rise 15 percent while the average increase nationally was just 9 percent. AB 194 moved to the state Senate on a 26-16 vote, with every Assembly Democrat and three Republicans voting in favor and all other Republicans voting against it. "This is a question of whether you want to look out for the insurance companies or do you want to look out for the people you represent," Assemblyman David Goldwater, D-Las Vegas, said during debate on AB 194. Goldwater added that people can make a correlation between driving risk and anything, but the state decides which items are appropriate when determining a person's insurance rate. Assemblyman Bob Beers, R-Las Vegas, said he was voting against the bill because he believed the change would cause everyone's insurance rates rise. Assemblyman Ron Knecht, R-Carson City, said the measure could end up hurting the very people Goldwater said he's trying to protect. "In sum, AB 194 will burden Nevada consumers with increased rates, poorer service and less consumer choice," Knecht said. "And it well may concentrate those bad effects on the low-income people least able to bear those burdens." During a committee hearing earlier this month, Goldwater said his credit score was greatly reduced after his father passed away and a credit company mistakenly thought it was him. His father was also named David. But insurance industry representatives said they only used credit information to help determine credit risks. Samuel Sorich, vice president of the National Association of Independent Insurers, said the industry uses specific details within credit reports to evaluate a person's risk level. "It's an insurance score," Sorich said. "It's not a credit score. There is a difference." Birny Birnbaum, executive director of the Center for Economic Justice and a specialist on the credit issue, said there may be a technical difference between insurance and credit scores -- but in the end credit information is used to determine a rate. Assemblyman Marcus Conklin, D-Las Vegas, said his biggest concern is that insurers don't all use the same credit reports, and that those reports are often inaccurate.
"It's an insurance score," Sorich said. "It's not a credit score. There is a difference." HellllOOOO...it is based of the SAME info!!
I was wondering if others (states) would follow the same idea. This is something that really needs to be taken care of. I hope EVERY state takes the same type of action.
In sum, AB 194 will burden Nevada consumers with increased rates, poorer service and less consumer choice," Knecht said. "And it well may concentrate those bad effects on the low-income people least able to bear those burdens." HAAAAAAAA
Most credit reports contain errors taht already cost consumers higher interest rates, etc. Adding insurance to this only makes it more difficult for those who are hand-to-mouth anyways have a more difficult time. What's next...credit checks for health insurance?? I am not sure when TX passed this law, but It will be great. Also, will be interesting to see if those outta state companies get nailed for not complying with the states that DO have this law. I know the mistakes wont be for long, as they have a way of covering themselves, but Im sure a few will slip.
IF credit reflects insurance risk I would like to know the answer to one question. ~~~~~~~~~~~~~~~~~~~~~~~~ If everybodys score remains the same for the next year will claims? A~Increase B~Decrease C~ Stay the same.
If everybodys score remains the same for the next year will claims? A~Increase B~Decrease C~ Stay the same.
POOR PEOPLE HAVE NEVER HAD ANY CLAIMS, ACCIDENTS, TICKETS FOR 30+ YEARS... their score takes a "DUMP" will they start to have CLAIMS, ACCIDENTS, TICKETS, NO!!!
If everybodys score remains the same for the next year will claims? A~Increase B~Decrease C~ Stay the same. George the simple question above proves there is no basses for the insurance industries allegation that there is a correlation between claims and credit.
Eventually, I think all states will follow. Right now, in states where credit is not allowed, rates have increased, but this will subside as more and more states fall in line, and the competitiveness of the market takes over. One thing to watch - I've been seeing something really bad happen - if you have a not at fault accident, pay close attention to what your insurance company does. Many of them are reporting the accidents incorrectly to CLUE (the claims database insurance companies use for rating) and then raising your rates. The incorrect report will show that you are at fault, even though the police report will show that you are not. This makes it very difficult for you to change companies, because any new company is going to rate you for the (incorrectly reported) not at fault accident. It is a way to force you to pay their higher premiums, because your search for new insurance will be pointless - the new companies will charge you with an at-fault accident. Make sure you get your own copies of all reports, and I suggest you check your clue report prior to applying for new insurance, to make sure that you will not have this problem. My guess - this will become more widespread among companies, until they get sued big-time. Insurance companies are losing money on their insurance business (yeah really) and are not making any money on their investments, so they are resorting to dubious means of getting more money from consumers.
four20nik, do you have a link or anything to this bill/law in Texas? a co-worker recently had his home owners insurance cancelled because 'his balances were too high on his credit cards' on his TU report.
so they are resorting to dubious means of getting more money from consumers. .creditboards.com =================== Not are-alwys have been! The END ************************* LB 59
