insurance underwriting;
homeowners; credit history
HB 2138 prescribes that insurers shall not fail to renew or increase a homeowner's insurance policy based on the policyholder's credit history.
HB 2138 was amended in the Financial Institutions and
Insurance committee to provide that renewals for homeowner
policies shall not be based in whole or in part on credit history for a
policyholder that has not had a claim in the previous ten years. The amendment stipulates that credit history
may not be the sole basis of an underwriting decision for homeowners that have
not filed a claim in the previous five years.
The use of insurance score models have become more frequently used by insurance companies. These models use information contained in a consumer's credit report (bill payments, number of accounts, length of credit history, and consumer debt), assign or weight the information in a certain category and determine a numeric score. This score is then used to determine what an applicant’s premium will be and is considered by insurers to be an accurate means to determine future risk. Concerns have arisen about the weight of the scoring models particularly in instances when information in the consumer report may be inaccurate. Additionally, long time policyholders have sought a better explanation about the application of scoring models, especially with regards to homeowners insurance. Currently there are no statutory provisions regarding the use of consumer information for insurance underwriting purposes. HB 2138 prescribes that insurers shall not fail to renew or increase a homeowner's insurance policy based on the policyholder's credit history.
· Stipulates that insurers shall not fail to renew or increase a homeowner's insurance policy, based in whole or in part on the policyholder's credit history under two conditions:
· All financial obligations to the insurer must be satisfied; and
· The insured has not filed a claim in the previous three years.
HB 2138 was amended
in the Financial Institutions and Insurance Committee as follows:
·
Eliminates the condition that
an insured be current on premium payments.
·
Stipulates that renewals for
homeowner policies shall not be based in whole or in part on credit history for
a policyholder that has not had a claim in the previous ten years.
·
Provides that an insurer may
not fail to renew a homeowner’s policy based solely on the policyholder’s
credit history if they have not filed a claim in the previous five years.
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45th Legislature
Second Regular Session 2 March
21, 2002
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