The Association of California Insurance Companies (ACIC) is opposing legislation that would prohibit insurers from considering credit information in selling homeowners insurance policies.
“This bill – SB 1323 by Sen. Deborah Ortiz, D-Sacramento – ignores federal law which authorizes the use of credit information for insurance purposes and contradicts the position of nearly every other state, where credit has been recognized as an actuarially sound underwriting and rating tool,” said ACIC President Sam Sorich.
SB 1323 recently passed the Senate 22-13 and is pending action in the Assembly.
“Insurers that consider credit information in their underwriting and pricing decisions do so for only one reason – credit-based insurance scoring is an objective tool that allows insurers to underwrite or rate business with a greater degree of certainty and accuracy. More accurate underwriting and rating means that policyholders enjoy a rate more fairly based upon their own risk of loss – and the majority of consumers benefit through lower rates than would otherwise be possible,” said Sorich.
He added that credit-based insurance scoring does not replace traditional underwriting and rating factors; it simply adds another level to the process so that insurers make better informed and fairer decisions.
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