The Property Casualty Insurers Association of America (PCI) praised the Louisiana Legislature for defeating a credit-based insurance scoring bill, which it said would have negatively influenced the industry, and advancing a file-and-use rating bill to the full Senate.
Senate Bill 215, which would have outlawed insurance scoring and information concerning a person’s credit in determining whether or not to issue or renew a homeowners or auto policy, failed to advance from the Lousiana House insurance committee. It had previously been approved by the state Senate.
The bill would have removed a key underwriting tool that assists insurance companies in accurately and objectively pricing insurance. It would also have undone legislation enacted last year that enables insurers to use credit information on a limited basis to set rates and make underwriting decisions, according to the PCI.
Louisiana lawmakers were wise to keep last year’s credit model intact because not only do insurance scores give insurers a more complete picture of risk, the scores also provide the majority of their policyholders policy discounts, said Greg LaCost, PCI senior counsel and regional manager.
House Bill 1514, which would enable commercial insurers to adjust rates more quickly than the current flex-rating system allows, now heads to the full Senate for consideration. Commercial insurers, excluding medical liability and workers’ compensation insurers, would be able to file a notice of a rate change with the Department of Insurance’s Office of Property and Casualty, and the rate would take effect 45 days later unless the commissioner took action to block it or approve the rate more quickly. .
The American Insurance Association was instrumental in crafting HB 1514. The bill’s proposed file-and-use system would allow insurers to change rates more rapidly because they would not need to first receive permission from the Insurance Rating Commission
PCI is pleased by the progress of this bill, which would enhance regulatory modernization efforts passed last year, LaCost said. Enhanced modernization should increase competition. Increased competition will mean a greater variety of products and choices for consumers.
Senate Bill 672 is still pending on the house floor. The measure would allow injured workers to file lawsuits against their employers while at the same time drawing workers’ compensation benefits. SB 672 would allow lawsuits when an employee alleges that the employer intentionally removed a safety guard or device and such removal allegedly caused that employee’s injury. The mere allegation would create a new cause of action against employers, and flood the courts with new lawsuits, LaCost said.
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