Connecticut House Bill HB05344

Connecticut 2021 Regular Session

• Introduced: 1/22/21
• Refer: 1/22/21

Caption

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

Impact

The passage of HB 05344 would result in a significant shift in the way insurance companies operate in the state. It would potentially compel insurers to revise their existing underwriting practices and criteria for determining risk and pricing. This could lead to an increase in premiums for some consumers, who previously benefited from lower rates due to favorable credit scores, while others may find it easier to obtain insurance regardless of their financial history. The bill aims to promote fairness and accessibility in the insurance market, but it also raises questions about how insurers might compensate for the loss of credit score assessments in their pricing models.

Summary

House Bill 05344 is a legislative measure aimed at prohibiting insurance companies from utilizing credit scores as a factor in underwriting or rating private passenger nonfleet automobile insurance policies. This bill is introduced with the intention of enhancing consumer protection by ensuring that an individual's credit history cannot affect their automobile insurance rates or eligibility. By eliminating credit scores from consideration, the bill seeks to create a more equitable assessment process for insurance applicants, who may be unfairly penalized based on their credit standing rather than their actual driving record or risk profile.

Contention

While the bill's supporters advocate for its potential to reduce discrimination in insurance underwriting, opponents may argue that credit scores serve as an important indicator of risk. Critics worry that eliminating their use could result in more systemic financial imbalances in the insurance market. Insurers often rely on credit scores to predict loss likelihood, and removing this factor may lead to increased costs for companies, which could be transferred to consumers in other forms. The bill presents a classic debate over consumer protection against perceived unfair credit practices versus the insurance industry's need for reliable predictors of risk.