Because most people have good credit, most people benefit when insurance companies are allowed to use credit-based scores to rate and underwrite auto and homeowners coverage, according to industry experts testifying at a public hearing on Tuesday before the New York Assembly Insurance Committee.
“Because New York law restricts the number of policies a company can non-renew to 2 percent of its book of business, massive non-renewals arising from the use of insurance scores will never be a problem in the state,” said Gerald Zimmerman, assistant general counsel for the National Association of Independent Insurers (NAII).
The hearing was held at the request of the Assembly Puerto Rican/Hispanic Task Force and chaired by Assembly Insurance Committee Chairman Pete Grannis and Puerto Rican/Hispanic Task Force Chairman Peter Riviera.
Zimmerman pointed out that prohibiting the use of insurance scores could result in higher premiums for New York consumers. “When Maryland banned the use of insurance scores for homeowners coverage, consumers there saw double-digit rate increases that are at least partially attributable to the ban,” he said. “Why do that to New York consumers, who already pay the second-highest insurance premiums in the country?”
Because New York mandates three-year policies subject to the 2 percent exception, insurers reportedly need every tool at their disposal to properly underwrite new business.
“An independent study conducted by the University of Texas concluded that poor insurance scores were predictive of claims filing, which makes credit scoring a useful underwriting tool for insurers,” added Zimmerman.
“The insurance industry is willing and eager to work with responsible legislators who want to enact sensible regulations on its use. But a ban on the use of insurance scores will help no one and hurt the consumers this committee seeks to protect.”
Was this article valuable?
Here are more articles you may enjoy.