Louisiana House Bill HB512

Louisiana 2010 Regular Session

• Introduced: 3/29/10
• Refer: 3/29/10

Caption

Provides that the only credit factor that may be used in determining insurance premiums is that relating to the payment of insurance premiums

Impact

The implications of HB 512 on state law are significant, as it revises the definitions and uses of credit-related data in forming insurance premiums. Previously, insurance providers had the latitude to consider a wider range of credit-related information, which could lead to higher premiums based on broader financial behaviors. The new policy requires that only credit data linked to the history of insurance premium payments will be considered, potentially leading to reduced premiums for those with a good payment record. This change is expected to foster a more equitable insurance environment, emphasizing fair treatment based on a consumer's direct record with insurance providers.

Summary

House Bill 512 aims to amend existing laws regarding the use of credit information in determining personal insurance premiums. The proposed legislation restricts the credit factors that insurance companies can utilize, limiting them strictly to payment histories related to insurance premiums. This change is intended to streamline the criteria used to assess an individual's insurance risk and to prevent the use of broader credit metrics that may unfairly disadvantage certain consumers. By focusing solely on payment patterns for existing insurance, the bill shifts how personal insurance assessments are conducted in Louisiana.

Sentiment

Overall, the sentiment regarding HB 512 appears to be positive among consumer advocacy groups and individuals concerned with fair insurance practices. Proponents argue that this bill will enhance consumer protection by ensuring that personal financial histories not directly related to insurance are not used against individuals when determining rates. Conversely, some insurance companies may express concerns, suggesting that restricting the type of data available could affect their pricing models and decrease their ability to accurately assess risk, thereby motivating opposition from segments of the insurance industry.

Contention

Notable points of contention around HB 512 may arise from debates over how insurers assess risks in the absence of broader credit information. While the aim is to protect consumers from potentially punitive pricing based on unrelated financial behaviors, critics could argue that limiting the factors used for underwriting could lead to less competitive pricing. Additionally, there may be discussions around the impacts on smaller insurance companies versus larger firms, as robust underwriting models and alternatives might be more feasible for larger corporations compared to their smaller counterparts.