Connecticut House Bill HB05372

Connecticut 2020 Regular Session

• Introduced: 2/27/20
• Refer: 2/27/20

Caption

An Act Prohibiting Insurance Companies From Using Credit History As A Factor In Underwriting Or Rating Private Passenger Nonfleet Automobile Insurance Policies.

Impact

The bill is expected to significantly alter the landscape of automobile insurance in the state by preventing insurers from using credit information as a metric for determining insurance rates. This means that traditional practices, which often linked higher insurance premiums to lower credit scores, will be rendered illegal. The bill stipulates that if credit history can adversely affect an insurance application, insurers are required to consider extraordinary life circumstances that may have impacted an individual's credit. These circumstances include situations such as illnesses, identity theft, or involuntary job loss, thereby incorporating a safety net for consumers facing hardships.

Summary

House Bill 05372 aims to prohibit insurance companies from utilizing an applicant's or insured's credit history when underwriting or rating private passenger nonfleets automobile insurance. This legislative move is intended to enhance fairness in the insurance industry, allowing individuals with lower credit scores to have better access to automobile insurance without being penalized for their financial history. The bill's proponents emphasize its role in promoting equity, particularly benefiting low-income and minorities who often suffer from adverse credit histories due to socioeconomic factors.

Contention

Throughout the discussions surrounding HB 05372, there were notable points of contention among various stakeholders. Opponents of the bill argue that eliminating credit history from underwriting criteria may lead to higher rates for all consumers and reduce the availability of coverage for those deemed at a higher risk. They assert that credit scores serve as a valid predictor of risk in the insurance industry. Conversely, supporters of the measure contend that basing insurance rates on credit scores is an unfair practice that disproportionately affects vulnerable populations. They highlight studies which suggest that credit history does not always correlate with an individual's ability to manage their insurance claims or overall risk profile.