The Louisiana House Insurance Committee has passed legislation (H.B. 318) regarding a ban on the use of credit scoring information from 2005, which will negatively affect consumers and the overall insurance market in Louisiana, according to the American Insurance Association (AIA).
“Louisiana already regulates insurer use of credit information and has strong consumer protections in place through both regulation and law, especially for extraordinary life circumstances such catastrophic hurricanes,” said John Marlow, assistant vice president, AIA Southwest Region.
In addition to the current regulation, Commissioner Jim Donelon issued Directive 196 earlier this year that specifically deemed Hurricanes Katrina and Rita to be catastrophic events.
The directive instructs personal lines insurers “to ignore all unfavorable entries entered into an individual’s credit record beginning with entries posted on August 26, 2005, and all such unfavorable entries posted thereafter, that are related to Hurricane Katrina and/or Hurricane Rita.”
“While H.B. 318 addresses an important consumer issue, it is one that is already being adequately handled. In fact, this bill may negatively impact both consumers and insurers because it is overbroad and excludes all 2005 credit information and it excludes valuable information available pre-hurricane — more than half of 2005. Consumers with positive credit experience during this time period could actually be harmed,” continued Marlow.
H.B. 318 was approved by the House Insurance Committee April 27 by a vote of 7-6 and moved to the full House.
Was this article valuable?
Here are more articles you may enjoy.