Bill Introduced to Protect Alaskans from Predatory Insurance Company Practices
February 25, 2016
HB357 was introduced Wednesday by Representative Adam Wool (D-Fairbanks) Wednesday and has been referred to the Alaska House Labor and Commerce Committee.
“This is just common sense,” said Rep. Wool. “What do credit scores have to do with insurance? If you don’t pay your bill, your coverage gets dropped. When you rent a car you pay the same rate regardless of your credit score. Why should insurance be any different?”
Using credit scores for insurance is a relatively new practice. The first time credit scores were used to decide insurability in Alaska was in 1989 and credit scores were not used to set rates in Alaska until 1998. Credit scores are not used for health insurance, but are used by some insurance companies for homeowners, automobile, and other types of insurance.
Although credit scores are designed to determine how risky it is to offer a person credit, a 2007 report from the Federal Trade Commission (FTC) noted that insurance companies do not use credit-based insurance scores to predict payment behavior. Studies by the FTC and the State Federation of Public Interest Groups have found that between 20% and 70% of people have errors on their credit reports.
HB 367 is not the only bill concerning credit scores and insurance being considered by the legislature. Senate Bill 127 would allow insurance companies to use credit scores to set rates or refuse coverage when renewing policies. That bill will be heard in the Senate Labor and Commerce Committee today, Thursday.
“Alaskans should not be denied insurance coverage because of an irrelevant number that might not even be accurate,” said Rep. Wool. “If you have good credit you can still let them run your credit score if you want it to be considered.”
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Edited by Mary Kauffman, SitNews
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