Alaska consumers could reportedly face higher insurance rates from a less competitive insurance market if a bill just sent to Gov. Frank Murkowski’s (R) desk is signed into law.
The Alaska Legislature has approved legislation that restricts insurers’ use of insurance scores in underwriting and rating homeowners and auto insurance policies, which will hinder insurers’ ability to accurately predict risks, according to the American Insurance Association (AIA).
“Credit-based insurance scoring enables insurers to more precisely predict loss and accurately price policies,” Mark Sektnan, AIA assistant vice president, western region, said. “This tool allows insurers to differentiate between lower and higher insurance risks, so customers who are less likely to file a claim pay lower rates.”
The measure, SB 13, authored by Senator Kim Elton (D), reportedly bans the use of insurance scores for the renewal of existing policies unless the consumer grants a waiver and also requires insurers to submit their models to the Department of Insurance. SB 13 also restricts the inclusion of specific factors in a scoring model.
“SB 13 will make it more difficult for insurers to offer Alaska consumers competitive prices that reflect their appropriate level of risk,” Sektnan said. “The Alaska Division of Insurance’s study on credit scoring verifies that most people benefit from the use of credit-based insurance scoring.”
The Alaska Senate approved SB 13 by a 19 – 1 vote, and the Alaska House of Representatives approved it by a vote of 31 to 7. The bill is now awaiting the signature or veto of Gov. Murkowski.
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