An Act Prohibiting Insurance Companies From Using Credit History As A Factor In Underwriting Or Rating Private Passenger Nonfleet Automobile Insurance Policies.
Impact
Should HB 6248 pass, it would have significant ramifications for how automobile insurance is rated and underwritten in the state. The amendment to section 38a-686 of the general statutes would enhance consumer protection, particularly for those whose credit history does not accurately reflect their risk as drivers. The legislation is expected to particularly benefit low-income individuals and communities who may have lower credit scores but pose no greater risk on the roads. Insurance companies would need to reevaluate their underwriting processes to comply with this ban, which could lead to changes in how premiums are calculated.
Summary
House Bill 6248 seeks to amend the current statutes governing automobile insurance by prohibiting insurance companies from utilizing an applicant's or insured's credit history when underwriting or rating private passenger nonfleet automobile insurance policies. This proposed legislation is intended to promote fairness in the insurance market by ensuring that individuals are not unfairly penalized based on their credit scores when seeking insurance coverage. By eliminating credit history as a factor, the bill aims to reduce the financial burden on consumers who may have poor credit ratings but are otherwise responsible drivers.
Contention
While supporters of HB 6248 argue that it addresses important equity concerns in the insurance industry, there may be contention surrounding its potential impact on the insurance marketplace. Critics of the bill might raise concerns about the financial implications for insurance providers, asserting that removing credit history as a factor could lead to increased premiums for consumers deemed higher risk based on other criteria. Additionally, there might be debate on whether such regulations could inadvertently reduce competition and drive up costs within the auto insurance market as companies adjust to the new underwriting framework.
An Act Concerning Insurance Market Conduct And Insurance Licensing, The Insurance Department's Technical Corrections And Other Revisions To The Insurance Statutes And Captive Insurance.